Q1 2024 Fair Isaac Corp Earnings Call
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 one followed by the four and your telephone.
But any time during the conference you need to reach an operator, Please press star Zero and as a reminder, this conference is being recorded Thursday January 25, 2024. It is now my pleasure to turn the conference over to David Singleton. Please go ahead.
Okay.
Good afternoon, and thank you for joining FICO as first 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.
Dave Singleton: We issued a press release that describes financial results compared to the prior year and 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.
Dave Singleton: Certain statements made in this presentation are forward looking under the private Securities Litigation Reform Act of 1095, those statements involve many risks and uncertainties that could cause actual results to differ materially.
Steven P. Weber: Information concerning these risks and uncertainties is contained in the company's filings with the SEC, particularly in the risk factors and forward looking statements portion of such filings.
Dave Singleton: Copies are available from the SEC from the FICO website or from our Investor Relations team.
Dave Singleton: 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 web site at FICO Dot com or on the SEC website at SEC Dot Gov and.
Dave Singleton: And a replay of this webcast will be available through January 25, 2025, now I will turn the call over to our CEO will Lansing.
William J. Lansing: Thanks, Dave and thank you everyone for joining us for our first quarter earnings call.
William J. Lansing: In the Investor Relations section of our website, we posted some financial highlights slides that we'll be referencing during our talk today.
William J. Lansing: I'm. So pleased to report that we had a great start to our fiscal year with double digit growth in revenue net income and EPS versus last year. It was a solid quarter and we're well positioned for our fiscal 2024.
As shown on page two of the first quarter financial highlights we reported first quarter revenues of $382 million up 11% over last year we.
We delivered $121 million of GAAP net income in the quarter of 24% and GAAP earnings of $4 80 per share up 25% from the prior year on.
Dave Singleton: On a non-GAAP basis quarter, one net income was $121 million with earnings of $4 81 per share up 12% and 13% respectively.
Dave Singleton: We delivered free cash flow of $121 million in our first quarter of 32% versus prior year.
Dave Singleton: We continue to return capital to our shareholders through buybacks and quarter, one we repurchased 78000 shares at an average price of $915 per share.
Dave Singleton: This month, we exhausted the remainder of the 2022 repurchase authorization, and we announced a new $500 million authorization. This week.
Dave Singleton: And our score segment as you can see from page six our first quarter revenues were $192 million up 8% versus the prior year.
Dave Singleton: On the <unk> side, the current quarter revenues were up 12% versus the prior year. This is a strong result, considering the impact of higher interest rates on loan origination volumes and also the Latin America license renewal that we had in Q1 of 2023.
Dave Singleton: On the <unk> side, the current quarter revenues were down 3% versus the prior year.
Dave Singleton: First quarter mortgage originations revenues were up 188% versus the prior year.
Dave Singleton: Auto originations were down 3% credit card personal loan and other originations revenues were down 5% versus the prior year.
Dave Singleton: We continue to see traction with our latest score FICO score 10 T.
Dave Singleton: So youll recall last quarter, we announced that movement mortgage wasn't early adopter of FICO 10 T. This quarter, we announced that cross country mortgage which is the nation's number three retail mortgage lender will use FICO 10 T to analyze this nonconforming loans there.
Dave Singleton: They are the first lender originating loans to be issued in our mortgage backed security based exclusively on the FICO score 10 T.
Dave Singleton: These clients. In addition to others have signed up to demonstrate to investors and to rating agencies and to other stakeholders. A real World example of the improved predictive performance offered by FICO score 10.
Dave Singleton: And our software segment, we delivered $190 million in quarter, one revenue up 14% from last year.
Dave Singleton: We continue to drive strong growth in IRR and NRI through our land and expand strategy with expand driven by increased customer usage. As you can see on page seven total <unk> was up 18% with platform <unk> growth growing 43%.
Dave Singleton: And non platform <unk> growing 11%.
Dave Singleton: Total NR for the quarter shown on page eight was 114% with platform NR at 136% and non platform NR at 108%.
Dave Singleton: We do continue to see strong demand from our new customers are total ACB bookings for the quarter were $18 million. A good result, after a particularly strong fourth quarter. We continue to have a robust pipeline of opportunities, particularly with FICO platform offerings.
Dave Singleton: We've expanded our FICO platform reach both by geography and by customer type.
Dave Singleton: In December we launched FICO platform with an event in India and we've already had several early adopters looking to expand to multiple use cases in the U K step change that charity a market leader, we will use the FICO platform to provide individual outcomes to consumers seeking to become debt free.
Dave Singleton: Our biggest opportunity near term continues to be in North America, where banks are focused on digital transformation and understand the values FICO platform. We're data driven analytics allow hyper personalized decisioning and consumer interactions on a real time basis, we continue to innovate and bring new capabilities to the FICO platform and work with new customers to demonstrate value.
Dave Singleton: And with existing customers to expand use cases.
Steven P. Weber: Our innovation will be highlighted at this year's FICO World event, which will take place in San Diego in April we'll have more on that later, but for now let me turn the call over to Steve for further financial details.
Steve: Thanks will and good afternoon, everyone.
Steve: As will mentioned we had another very good quarter with total revenue of $382 million, an increase of 11% over the prior year or 12% when adjusted for last year's divestiture.
Steve: Scores segment revenues for the quarter were $192 million up eight 8% from Q1 of 2023, <unk> revenues were up 12% driven by mortgage originations revenues.
Steve: Our growth would have been higher if not for the Latin American license revenue, which we'll talk about in Q1 of 2023 that did not recur this year.
Dave Singleton: Our b to C revenues were down 3% versus the prior year due to declines in our Myfico business.
Partially offset by our licensee <unk> business.
Dave Singleton: Score segment revenues in the first quarter were $190 million up 14% versus Q1 of 2023 or 17% when adjusted for the divestiture.
Dave Singleton: This quarter, 83% of total company revenues were derived from our Americas region, which is the combination of our North America and Latin American regions.
Dave Singleton: Our EMEA region generated 10% of revenues in the Asia Pacific region delivered 7%.
Dave Singleton: Our total software <unk> was $688 million, an 18% increase over the prior year platform <unk> was $190 million, representing 28% of our total Q1 dollars 24.
Dave Singleton: Up from 23% of total Q1, 'twenty three IRR.
Dave Singleton: Platform <unk> grew 43% versus the prior year, while non platform <unk> grew 11% to $497 million this quarter.
Dave Singleton: Our platform land and expand strategy continues to be very successful.
Dave Singleton: Our dollar based net retention rate in the quarter was 114% versus 110% last year.
Dave Singleton: Platform <unk> was 136% versus 130% in the prior year, while our non platform NR was 108% versus 103% in the prior year.
Dave Singleton: Non platform <unk> growth was driven by customers increased usage and CPI price increases.
Dave Singleton: Our software ACB bookings for the quarter were $18 3 million versus $21 5 million in the prior year. We view this as a successful sales quarter coming off a record quarter in our fourth quarter of 'twenty three.
Remember that ACB bookings include only the annual value of software sales and exclude professional services.
Turning now to our expenses for the quarter total operating expenses were $231 million this quarter versus $205 million in the prior year.
Dave Singleton: Our current quarter expenses are a 3% increase from the prior quarter, which was $224 million.
Dave Singleton: As we indicated last quarter, we maintain our focus on investment to accelerate development and distribution of the FICO platform.
Dave Singleton: And as a reminder, our incremental investment is relatively modest and is already built into our guidance.
Dave Singleton: Our non-GAAP operating margin as shown in our Reg G schedule was 48% for the quarter.
Dave Singleton: GAAP net income this quarter was $121 million up 24% from the prior year's quarter adjusting.
Dave Singleton: Adjusting for excess tax benefit in the prior year sigh around divestiture, our one year over year GAAP net income grew 14%.
Dave Singleton: Our non-GAAP net income was 121 million for the quarter up 12% from the prior year's quarter.
Dave Singleton: The effective tax rate for the quarter was 7% and included $24 million of reduced tax expense from excess tax benefits recognized upon the settlement or exercise of employee stock Awards.
In the prior year, the excess tax benefit was $10 million.
Dave Singleton: We believe that our fiscal year 2024, net effective tax rate will be around 22%, while our recurring tax rate is expected to be around 26%.
Dave Singleton: Again, the recurring tax rate is before any excess tax benefit and other discrete items.
Dave Singleton: Free cash flow for the quarter was $121 million or.
Dave Singleton: A 32% increase on the previous year.
Dave Singleton: The trailing 12 month free cash flow was $494 million compared to $465 million in the prior year.
Dave Singleton: At the end of the quarter, we had $197 million in cash and marketable investments our total debt at quarter end was $196 billion with a weighted average interest rate of five 2%.
Currently 66% of our total debt is fixed rate our floating debt is pre payable at any time and gives us the flexibility to use free cash flow to reduce outstanding floating debt balances in future periods.
Dave Singleton: Turning to return of capital we bought back 78000 shares in the first quarter at an average price of $915 per share.
Dave Singleton: At the end of the quarter, we had $49 million remaining on the board authorization and as will mentioned, we subsequently bought additional shares in January exhausting the authorization.
Dave Singleton: And this week, we announced a new $500 million repurchase authorization and.
Dave Singleton: And we continue to view share repurchases as an attractive use of cash and with that I'll turn it back to will for his final thoughts. Thanks.
Will: Thanks, Steve.
Dave Singleton: I am excited about our traction as we continue to drive more innovation than ever.
Dave Singleton: Scores business, our financial inclusion efforts continue as we launched a FICO score aimed at helping Ukrainian refugees displaced through the war have access to credit.
Additionally, we added our third historically black colleges and University, Delaware State University as part of our FICO educational analytics Challenge. This is a program created to help promote conversing and data science engineering and technology.
Dave Singleton: And the software business, we added 20, new enhancements to the FICO platform and expanded our patent footprint over 220 patents by adding 10 patents related to digital Decisioning fraud detection machine learning and responsible AI.
Dave Singleton: And this innovation will be on display at FICO World 2024, we will showcase how FICO truly supercharge is our clients' digital transformations at this four day event, which takes place in April will bring together industry professionals from around the world to connect share best practices and learn how FICO enables organizations to power customer connections at scale.
Dave Singleton: We will highlight successful clients and demonstrates the power of the FICO platform, enabling companies to operationalize analytics become more composed of all and make better decisions at scale with that I'll turn the call back to Dave and we will open up the Q&A session.
Dave Singleton: Well this concludes our prepared remarks.
Dave Singleton: We are now ready to take questions operator, please open the lines.
Dave Singleton: Thank you so much if you would like to register a question. Please press. The one followed by the four on your telephone you will hear a three ton prompts to acknowledge your request. If your question has been answered and you would like to withdraw your registration. Please press the one followed by the sorry.
Dave Singleton: And our first question is from the line of Faiza.
Faiza: From Deutsche Bank. Please go ahead.
Faiza: Yes, hi, Thank you good afternoon.
Faiza: So I first wanted to ask about software you touched on this a little bit, but give us give us a bit more color on the software.
Faiza: Pipeline is you said you do have cycle, what is coming up so what are some of the renewables that we should watch for and as part of that if you can address some seasonality in the business because we had a bit of a step down in <unk>.
Dave Singleton: Talk a bit about what your expectations are for <unk> as we move to the yards the step down more seasonal or should we expect sort of more of a structural slowdown.
Dave Singleton: Yes, I think it's not so much just to take this in reverse order not really a seasonal thing so much as it is deals move around and they move from quarter to quarter and I would say this quarter. Some deals were pushed to next quarter, we don't see that as a very big deal I mean, not something that we're focused on.
Dave Singleton: The pipeline is the strongest it has ever been.
Dave Singleton: And it's also the most mature it's ever been so I would say in terms of the stages of the pipeline we're seeing more.
Dave Singleton: Maturity within the pipeline than we have in years past. So we're actually feeling really good about the pipeline.
Dave Singleton: In terms of what to expect of FICO World.
Dave Singleton: Think that Youll have.
Dave Singleton: Traditionally do which is take you through the latest and greatest.
Dave Singleton: And innovation from FICO.
Dave Singleton: We're also going to see a lot of customers.
Dave Singleton: Who are delighted to stand up in front of their peers and explain all the value that they're getting out of the FICO platform.
Dave Singleton: I think youll see a lot of reference customers in.
Dave Singleton: Part of FICO World, It's not just a sales event for us it's really an event for our customers to help sell to one another because they wind up being our best references and so it's a place where they.
Dave Singleton: As practices get passed around and there is a lot of adoption of FICO technology there.
Dave Singleton: Great. Thank you and then just switching on the score side I Wonder if anything has changed as it relates to your volume expectations for 2024.
Dave Singleton: There's been some since we since you last reported earnings and gave the guide it seems like the overall environment might be trending a little bit better.
Dave Singleton: Some more optimism.
Dave Singleton: So I'm curious if anything.
Dave Singleton: Anything was different.
Dave Singleton: As it relates to your expectations in the quarter itself and how youre thinking about about volume going forward. So we're very comfortable with our guidance and we.
Dave Singleton: We continue to see.
Dave Singleton: Volumes, roughly where we expected frankly, I'm not sure I agree with.
Dave Singleton: With the view that there's more optimism maybe rates have ticked up and mortgages recently and so.
Dave Singleton: If anything I guess I feel like.
Dave Singleton: The rate.
Dave Singleton: Fallen rates might be slower than a lot of industry pundits had been forecasting that said as you know FICO is always very conservative in our view about these things and so I wouldn't say that we're caught in any way by by a little uptick in rates or buy.
Dave Singleton: Slowness in rates coming down there is no question that we will benefit tremendously as volumes increase when rates come down.
Dave Singleton: We anticipate that within the year and within next year.
Dave Singleton: But I would say right now no change in our outlook.
Dave Singleton: Great. Thank you so much.
Dave Singleton: And our next question is from the line of Surinder.
Surinder: With Jefferies. Please go ahead.
Surinder: Thank you.
Surinder: So we'll just have another follow up question on the software business can you talk a little bit about I guess the pipeline when it comes to kind of new clients.
Surinder: When I do the math it looks like to pace at which new clients are bringing on has been slowing for a number of quarters now.
Dave Singleton: Just any color on your ability to bring onboard a new client at this point.
Dave Singleton: We have not had any challenges bringing on new clients.
Dave Singleton: Our as our penetration goes up.
Dave Singleton: We will have captured more and more of our targeted enterprise customer.
Dave Singleton: Customer base and more and more of the growth will be from the expand part of the.
Dave Singleton: The expand part of the business.
Dave Singleton: As more use cases and more volume with existing customers.
Dave Singleton: Does take some time to onboard so it doesn't always show up instantly, but but I think what youre going to see over time is a mix shift from land to expand although we're not having trouble lending we continue to land new customers, Yes, I would just say when we started with it's really new.
Dave Singleton: The lead time is longer on them than an existing customer so thats why youll see some of that but.
Dave Singleton: We still sell side, a lot of new deals with a lot of new customers or at least different use cases with customers that are using some of our legacy products.
Dave Singleton: Got it and then in terms of just the color around the margins in the software business at this point.
Dave Singleton: When I kind of go through the numbers.
Dave Singleton: It sounds like you've built in all of the what you kind of need for this year in terms of your guide.
Dave Singleton: So does that mean that incremental revenues should they show up generally will drop to the bottom line or how should we think about things like that.
Dave Singleton: Great question I think in general that's a fair statement, we're pretty comfortable with where their margins are and our expenses are running in line with what we expect and what we forecast and what we planned for and so what you said is is largely right incremental revenue should fall through to the bottom line that said.
As incremental revenue comes in we do reevaluate whether we wanted to devote some portion of that two additional resource for more rapid development. So.
Dave Singleton: 100% of it followed Bottomline I don't know and we will see.
Dave Singleton: Thank you.
Dave Singleton: And our next question is from the line of Manav Patnaik with Barclays. Please go ahead.
Dave Singleton: Thank you good evening gentlemen, Steve maybe just to follow up on that if you could help with the software.
Manav Patnaik: Kind of cadence around the operating expense looks like it ticked up.
Sequentially, maybe little bit higher than we thought but since everything is running in line can you just walk us through how we should think about the expense spend there.
Steve: Yes, so I mean, we talked about that a little bit last quarter that we're making some investments there is a lot of growth here.
Steve: There's a lot more room for growth and we're doing some investment on the R&D side to add more functionality and we're doing some investment on cyber security as well. So so there is some investment coming in there there's a lot of different moving parts this quarter because you've got.
Steve: We had the end of the year bonuses that happened to their roles in here as well so you'll probably continue to see the expenses trend up through the year as we bring more people on and we have about 100 more people today that we had a year ago right. So we're investing like we said in those specific areas. So.
Manav Patnaik: You will see the expenses throughout the year trend up but not really all that dramatically.
Manav Patnaik: Okay fair enough.
Manav Patnaik: And then we will just in terms of.
Manav Patnaik: The lending commentary I mean, I think we all have abused in mortgage so let's put that aside for a second but can you just walk us through what's going on in auto and card with both those down 3% and 5% just.
Manav Patnaik: And any anything to call out there and what the what the outlook for 'twenty four is really for those two categories.
Manav Patnaik: I don't have a lot of additional to add there I mean, it's it's.
Manav Patnaik: Down a little bit.
Manav Patnaik: Again, not a gigantic surprise to us I think we're very comfortable with that within our kind of range of forecast so not not.
We don't wouldn't consider it a big surprise in terms of.
Guessing about the future honestly Manav your guess is as good as ours.
Manav Patnaik: As you know.
Manav Patnaik: A trailing indicator.
Manav Patnaik: Yeah fair enough. Thank you.
Manav Patnaik: And our next question is from the line of Kyle Peterson with Needham. Please go ahead.
Kyle Peterson: Great. Thanks, guys good afternoon.
Wanted to continue on expenses and kind of what you guys saw.
Kyle Peterson: This quarter I guess.
Kyle Peterson: In terms of mix of revenue it looks like there's a lower amount of professional services, which usually would think of as kind of a pivot drag on expenses. So I just want to see how should we should think about the relationship between the services revenue in some of these buckets versus the expense growth.
Manav Patnaik: Is there any lag or how should we think about it.
Manav Patnaik: Sir.
Manav Patnaik: No I mean, so the professional services pieces.
Manav Patnaik: Maybe a little bit unique because most of the PFS work is done by internal resources. So in some cases, if they are not working on billable deals that we're working on R&D in some cases, we've moved people into that function as well so those costs don't necessarily go away.
Manav Patnaik: Our professional services piece for us really is.
Manav Patnaik: Most of its implementation work that we do on the software side. So we don't really look at that necessarily as a.
Manav Patnaik: It's a profit center, but in terms of.
Manav Patnaik: As an indicator of potential expenses I think the PFS PFS tend to run in that $20 million to $25 million range is a little bit lower this quarter, but it's not going to be a lot higher because we're really we're kind of downplaying that aspect and we don't have as many resources NPS as we've had in past years. So I don't think you're ever going to see that really pick up.
Manav Patnaik: Or really have much of a material impact on the overall margin of the business.
Manav Patnaik: Maybe just to follow on.
Manav Patnaik: And the guidance methodology, particularly on the score side things looks like.
Manav Patnaik: It sounds like your overall revenue top line is pretty much unchanged.
Manav Patnaik: And the volume assumptions seem the same so I guess could.
Manav Patnaik: Could you just confirm.
Manav Patnaik: On the pricing assumptions and kind of what maybe what actions you guys have taken.
Manav Patnaik: On that front and if everything.
Manav Patnaik: And went into effect on the first of the year.
Is in the guidance or there is still kind of a wait and see appropriate volumes.
Manav Patnaik: There's still a lot of obviously a lot of volatility on the volumes. So I think next quarter, yeah. All the pricing went into effect in first part of January.
Manav Patnaik: We'll have a lot more color we can provide next quarter, because we will see the impacts of all that we will see will be that much farther into the year and we'll know a lot more about about what volumes look like and frankly, we'll know a lot more about what the rate environment looks like probably in three months. So we will be able to provide more color for the rest of the year at that point.
Manav Patnaik: Got it that's helpful. Thanks, guys.
Manav Patnaik: And our next question is from the line of George Tong with Goldman Sachs. Please go ahead.
Manav Patnaik: Hi, Thanks, good afternoon.
Manav Patnaik: <unk> announced removing tiered pricing increases for mortgage scores. This year can you talk a little bit about your pricing strategy for autos and credit cards, and how pricing trends in these categories.
Manav Patnaik: We compare with last year.
Manav Patnaik: So we we have adjusted pricing.
Manav Patnaik: You identified you highlighted probably the biggest change in pricing this year, which was collapsing the tiers in mortgage and that was really in response to a lot of feedback from the industry.
Manav Patnaik: About a level playing field and so we accommodated that.
Manav Patnaik: In terms of the others.
Manav Patnaik: As you know we adjust prices in every segment every year and it's relatively surgical we go pocket by pocket and think through what we can do virtually all of our scores.
Manav Patnaik: Have some level of CPI inflation pricing adjustment and then others get some additional beyond that where we considered appropriate.
Manav Patnaik: I would say that we did not take very significant actions in auto and card not not not worth calling out separately and beyond kind of cost of living adjustment this year.
Manav Patnaik: Got it that's helpful.
You provide a little bit.
Manav Patnaik: Of detail around some of the real time trends that youre seeing with mortgage inquiries and some of the real time trends that youre seeing with card volumes and auto volumes.
Manav Patnaik: With mortgage I would say the surprises that we're seeing a little bit of refi activity.
Manav Patnaik: It doesn't take very much for people to come back in the market and try to refinance their mortgages and so even a point of decline is enough to generate some volume that we didn't really anticipate.
Manav Patnaik: Steve maybe you want to comment on on the other yes, I mean in terms of real time frankly, most of the reporting we get is in arrears to some degree so.
Steve: The numbers you can get from industry analysts are going to be much more real time that where we can provide theres a lot of industry data. That's provided on a weekly basis thats going to be much more real time that we'll be able to give you.
Steve: And then what about some of the <unk> numbers that youre seeing with cards and autos.
Steve: Well I think like card was running a lot hotter last year coming out of when the when the refi slowed down although there was a big pickup in card and we're still seeing that.
Steve: Slowdown in about a year ago now so.
Dave Singleton: Pretty steady I think theres been a lot of pullback on the subprime markets.
Dave Singleton: But overall, it's not all that materially different the volumes are not.
It will fluctuate a little bit depending on even with some of the bigger players might do in any one given quarter, but.
Dave Singleton: Again, that's not that's probably not as across the board as mortgage which is more more driven by consumer demand tied to interest rates.
Dave Singleton: Great and commentary on autos.
Dave Singleton: Idaho.
Dave Singleton: Auto is relatively stable and has been through that I mean, it's a fee.
Dave Singleton: 2% here or there.
Dave Singleton: But you don't see a lot of volatility in the auto market.
Dave Singleton: The lease on the lending side.
Dave Singleton: Got it very helpful. Thank you.
Dave Singleton: Okay.
Dave Singleton: And as a reminder, if you do want to ask a question you can pass the one followed by the four and our next question is from the line of Seth Weber with Wells Fargo Securities. Please go ahead.
Steven P. Weber: Hey, guys good afternoon.
Steven P. Weber: I wanted to ask just to go back to the comment about some deals getting pushed to the second quarter.
Steven P. Weber: There anything idiosyncratic that you'd call out there are there is there any focus on any certain.
Product customer categories or regions or anything that.
Steven P. Weber: Yeah.
Steven P. Weber: You would attribute that to or are you just seeing any.
Steven P. Weber: An elongation of the sales cycle, because I think in prior quarters, you guys had talked about a shortening of the sales cycle. So I'm just trying to understand if there is any kind of a bigger change thats going on here no not really I mean, the sales cycle is roughly where it's been lately, which is shorter than where it was a year or two years ago.
Steven P. Weber: <unk>.
Steven P. Weber: I would say that.
Steven P. Weber: I really I mean, there is nothing special there.
Steven P. Weber: <unk>.
Dave Singleton: It probably worth reiterating that FICO. Unlike a lot of other software companies doesn't do a lot of Wheeling and dealing at the end of the quarter to pull in business and it is cultural with us.
Dave Singleton: Our our salespeople and all of our employees.
Manav Patnaik: Really live act believe in our number one corporate value, which is act like an owner.
We are really truly aligned with shareholders, we think about it as a family business and that includes the salespeople at end of quarter and Thats not to say that we don't make a push at the end of the quarter to close business. Obviously, we do like everyone, but what's not on the table as a bunch of extra discounting and hail Mary type stuff just to pull something in a week earlier.
Manav Patnaik: Just don't care.
Manav Patnaik: <unk>.
Manav Patnaik: You will never find FICO, making radical concessions at quarter end.
Manav Patnaik: Two.
Dave Singleton: Two to prop up a quarterly number it's just not who we are.
Manav Patnaik: It's just we're keeping that in mind, so when we say deals move from quarter to quarter. It has more to do with the client and their budget timeline and their approval process than it has to do with anything else, Yeah, and I would just say practically we have some deals that we didnt sign that last week of December just because it was hard to get people right.
Manav Patnaik: Run into this issue would be December that you might have people that are out on vacation or traveling each key gives us.
Manav Patnaik: The ink on the paper. So some of these deals are actually closed in January so I don't again from Wells Fargo.
Manav Patnaik: Great point, we were not scrambling trying to do everything humanly possible to get the deal signed in the last week of December as opposed to the first week of January.
Manav Patnaik: Got it okay. That's helpful. Thanks, and then just can you just expanding on that a little bit can you.
Manav Patnaik: <unk>.
Manav Patnaik: Just update us on any traction that youre seeing whatever traction youre seeing kind of outside the financial services area for the platform business.
Manav Patnaik: Whether you are seeing bigger uptake there from.
Manav Patnaik: Non traditional customers.
Manav Patnaik: Yes, I would say that our platform business is still very much focused on financial services.
Manav Patnaik: The.
Manav Patnaik: The business, we do outside financial services today, we do we do close closely aligned stuff like insurance, we do that.
Manav Patnaik: But in terms of really non financial services verticals.
Dave Singleton: I'd say the law.
Dave Singleton: Lions share of that is in the optimization area, where we have the world's leading optimization engine and so it's used by airlines and retailers in all kinds of.
Dave Singleton: Sports scheduling and all kinds of places that are not as typical when you think of FICO.
Dave Singleton: That said our strategy around non financial services is very much to go there through partners, we have a really robust and growing an ever stronger.
Indirect sales force, where our partners focus on both geography.
Dave Singleton: Geographies, where we're not so present and on partners.
Partners in geographies, where we're not present and then on verticals, where we're not as represented.
Dave Singleton: And I think youll see as our as our strategy evolves and you've heard US talk about building an open ecosystem for with the Decisioning platform available to any any BDC company interested in using it.
Dave Singleton: That's happening this year and we will have open Apis. This year, we will have software development kits for Isps and retailers in bars, and those who wanted to take our Decisioning solutions to other verticals. So youll see that starting to happen this year, but thats really our strategy is to do that through partners is not much that theres not much of that that we do.
Dave Singleton: Directly.
Dave Singleton: Got it okay. Thank you guys I appreciate it.
Dave Singleton: And our next question comes from the line of Ashish <unk> with RBC capital markets. Please go ahead.
Dave Singleton: Thanks for taking my question.
Dave Singleton: Just a quick question on the mortgage one you did you provide what the mortgage volume growth was in the first quarter of Bancorp.
Ashish Sabadra: Yes, we just talked how much revenues, we don't we don't pull out the different components in terms of the volume, but I mean, you can get the volumes from third party sources pretty easily.
No. That's helpful and then maybe on the the headwinds from the Latam license revenue can you just remind us how much was that revenue in the prior to you at 123 or how should we think about the growth in the business excluding that onetime headwind and then as we go through the rest of the year.
Ashish Sabadra: Two if there's any other headwinds to be cognizant of.
Manav Patnaik: This potentially license.
Manav Patnaik: Those are hard to our hard too.
Manav Patnaik: Hard to project frankly.
Manav Patnaik: Because we.
Manav Patnaik: We don't know when they're going to renew or.
Manav Patnaik: Some guys will renew early some that will renew later, if they're taking on additional pieces. So the renewal pieces is difficult I mean, if you look at the next couple of quarters, we had some pretty big point in time revenue last year in Q2 and Q3.
Manav Patnaik: So we may not have that again this year from us we have renewals that end up moving to the platform and they end up become ratable revenue. So you don't have upfront license revenue. So we're actively trying to move people, obviously to the platform, which we forgo the upfront license revenue in favor of recurring revenue so as those happen you're going to see changes.
Manav Patnaik: There.
Manav Patnaik: That's typical to the companies that are moving our ratable revenue, but it's less dramatic for us to do down over time, but there's always the potential that youre going to see that and you'll have to think about that as different quarters come up.
Manav Patnaik: Thank you.
Manav Patnaik: And our next question comes from the line of Jeff Mueller with Baird. Please go ahead.
Manav Patnaik: Yes. Thank you I didn't understand the answer on the last question. The Lat am renewal in the year ago that wasn't scores not software correct. Yes that was in scores I'm, sorry that that was the scope and the ones and the ones in scores happened occasionally.
Manav Patnaik: We will have license deals typically their foreign deals in areas where.
Manav Patnaik: A large bank wants to build their own score model.
Manav Patnaik: And we will sign.
Manav Patnaik: Deals with them so that within scores, we occasionally have those and it's difficult to again, even with all of its difficult to know what the what.
Manav Patnaik: What the timing is going to be.
Manav Patnaik: Okay, and then just trying to I guess, probably the last question as well like the 21% growth in BW scores last quarter, 12% growth this quarter.
Manav Patnaik: How much of that slowdown is just due to the lat am comp in the year ago or anything else that you can say on like non origination revenue trends because yes. It doesn't look like a lot of slightly early kind of out of the lab.
Manav Patnaik: It's completely due to Latam and lower mortgage volumes in Q1 versus Q4, right I mean, that's where volume caters obviously right.
Manav Patnaik: If the volumes are down, which they're going to be they're going to be anyway seasonally in that quarter. The December quarter has fewer mortgages typically than September quarter does so it's the combination of those two things outside of originations.
Manav Patnaik: It was up slightly the non origination business is up slightly but not all that significant.
Manav Patnaik: Okay, and then can you just help me with like any rough order magnitude of sizing if I look at mortgage mortgage origination revenue.
Manav Patnaik: Roughly how much of it comes from.
Manav Patnaik: Closed loans versus things like rate shopping or applications that don't result in a closed loan or anything else that would like followed.
Manav Patnaik: That bucket, yes, frankly, we don't know because we don't actually I think <unk> asked the Bureau's, let's tell you the same thing.
Manav Patnaik: The bundles get pulled.
Manav Patnaik: For with scores and data and they don't necessarily know nobody necessarily know separate actual vendor knows if it was closed or not so we don't really know.
Manav Patnaik: Whether the whether they turn into a closed loan or not that's not reported to us.
Manav Patnaik: Okay. Thank you.
Manav Patnaik: Okay.
Manav Patnaik: And our next question is from the line of James.
Manav Patnaik: Bhatia with Morningstar. Please go ahead.
Manav Patnaik: Good evening I'm, sorry, if I missed it but can you provide what percentage of your scores revenue was mortgage in the quarter like I know you.
Manav Patnaik: We have provided that in the previous quarter.
Manav Patnaik: Yes, we didn't provide that.
Manav Patnaik: I don't have that number in front of me what the percentage was.
Manav Patnaik: So we don't we didnt occasionally we will do that we didn't provide that this quarter. So you could probably back into it. If you took the numbers we gave you.
Manav Patnaik: Last year, and then the percentage increases.
Okay. We can follow up I guess I know, we talked about like the Latin America kind of scores license, but if I look at like the HSE.
Manav Patnaik: Core revenue in your 10-K or 10-Q.
Manav Patnaik: I think $5 9 million and definitely more than $4 1 million for the for all of fiscal 2023.
Manav Patnaik: I guess is that we had.
Manav Patnaik: We got a license deal in Asia. We're in scores. So we had a much larger one in Latin America last year and then if you look at it at any given any given quarter probably half. The time, we have a license deal somewhere but obviously the total license deals. This year were much smaller this year than they were last year.
And that was because of the Latin American deal.
Manav Patnaik: Alright, thank you.
Okay.
Manav Patnaik: And at this time there are no more questions in the queue.
Manav Patnaik: I will now conclude the call. So thank you everyone for joining today's call. This does conclude the conference call and we thank you for your participation and ask that you. Please disconnect your lines.
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