Q2 2024 Fair Isaac Corp Earnings Call

April 25, 2024

Operator: Good day, and thank you for standing by. Welcome to the Fair Isaac Second Quarter Earnings Conference. At this time, all participants are listening. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, press star 1 1 on your telephone. You will then hear an automated message advising your hand. For all your questions, please press star 1-1 again. Please be advised that today's conference is. I would now like to hand the conference over to your speaker today, Dave Singleton. Please go ahead.

Good day, and thank you for standing by.

Speaker Change: Welcome to the fair Isaac second quarter earnings Conference call.

Speaker Change: This time, all participants are in a listen only mode.

After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session you will need to press star one on your telephone.

You will then hear an automated message advising your hand is raised.

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Please be advised today's conference is being recorded.

I would now like to hand, the conference over your speaker today, Dave Singleton. Please go ahead.

Dave Singleton: 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 Act Reform Act of 1995.

Good afternoon, and thank you for attending FICO 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 that business.

Speaker Change: Certain statements made in this presentation are forward looking under the private Securities Litigation Reform Act of 1095.

Dave Singleton: Those statements involve many 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 risk factors and forward-looking statements portion of such filings. Copies are available from the SEC, from the FICO website, or from our investor relations team.

Those statements involve many risks and uncertainties that could cause actual results to differ materially.

Speaker Change: 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.

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 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 FCC's website at FCC.gov.

Speaker Change: This call will also include statements regarding certain non-GAAP financial measures.

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.

Speaker Change: The earnings release and regulation G schedule are available on the Investor Relations page of the company's website at FICO dot com or on the Sec's website at SEC Gov.

Dave Singleton: And a replay of this webcast will be available through April 25th, 2025. I will now turn the call over to our CEO, Will Lansing. Thanks, Dave.

And a replay of this webcast will be available through April 25, 2025, I will now turn the call over to our CEO will Lansing. Thanks.

William J. Lansing: And thanks, everyone, for joining us for our second quarter earnings call. In the investor relations section of our website, we posted some financial highlight slides that we'll be referencing during our presentation today. Today, I'll talk about this quarter's results and our increased guidance for the full fiscal year. We again delivered strong results, demonstrating the resiliency of our business with solid growth both in scores and in software. As shown on page 2 of the second quarter financial highlights, we reported Q2 revenues of $434 million, up 14% over the last year. We delivered $130 million of gap net income in the quarter, up 28%.

William J. Lansing: Thanks, Dave and thanks, everyone for joining us for our second quarter earnings call in.

William J. Lansing: In the Investor Relations section of our website, we posted some financial highlight slides that we'll be referencing during our presentation today.

William J. Lansing: Today I will talk about this quarter's results and our increased guidance for the full fiscal year.

We again delivered strong results demonstrating the resiliency of our business with solid growth both in scores and in software.

William J. Lansing: As shown on page two of the second quarter financial highlights, we reported Q2 revenues of $434 million up 14% over the last year we.

William J. Lansing: We delivered a $130 million of GAAP net income in the quarter up 28%.

William J. Lansing: We delivered GAAP earnings of $5.16 per share, up 29% from the prior year. On a non-GAAP basis, Q2 net income was $154 million, with earnings of $6.14 per share, up 27% and 29%, respectively. We delivered free cash flow of $62 million in our second quarter and $182 million in the first half of fiscal 24. We continue to return capital to our shareholders through buybacks. In Q2, we repurchased 144,000 shares at an average price of $1,246 per share.

William J. Lansing: We delivered GAAP earnings of $5 16 per share up 29% from the prior year on a non-GAAP basis Q2, net income was 154 million with earnings of $6 14 per share up 27% and 29% respectively.

William J. Lansing: We delivered free cash flow of $62 million in our second quarter and $182 million in the first half of fiscal 'twenty four.

William J. Lansing: We continue to return capital to our shareholders through buybacks in Q2, we repurchased 144000 shares at an average price of $1246 per share.

William J. Lansing: We have $367 million remaining on our board repurchase authorization. Now, in our score segment on page six of the presentation, our second quarter revenues were $237 million, up 19% versus the prior year. In B2B, the current quarter revenues were up 28% versus the prior year. On the B2C side, the current quarter revenues were down 4% versus the prior year. Second quarter mortgage originations revenues were up 85% versus the prior year

William J. Lansing: We have $367 million remaining on our board repurchase authorization.

William J. Lansing: No.

William J. Lansing: Our scores segment on page six of the presentation, our second quarter revenues were $237 million up 19% versus the prior year.

William J. Lansing: <unk> current quarter revenues were up 28% versus the prior year on the BDC side, the current quarter revenues were down 4% versus the prior year.

William J. Lansing: Second quarter mortgage originations revenues were up 85% versus the prior year.

William J. Lansing: Mortgage origination revenue accounted for 46% of B2B revenue and 36% of total scores revenue; auto originations revenues were down 1%, while credit card, personal loan, and other originations revenues were down 9% versus the prior year. We continue to drive strong adoption of FICO Score 10-T for non-conforming mortgages. Since 2023, clients with over $100 billion in annualized mortgage originations and about $300 billion in eligible mortgage portfolio servicing have signed up for the FICO Score 10-T. FICO Score 10-T for conforming mortgages will be rolled out based on the timeline set by the FHFA.

William J. Lansing: Mortgage origination revenue accounted for 46% of <unk> revenue and 36% of total scores revenue.

William J. Lansing: Auto originations revenues were down 1%, while credit card personal loan and other originations revenues were down 9% versus the prior year.

William J. Lansing: We continue to drive strong adoption for FICO score 10 T for nonconforming mortgages since 2023 clients with over $100 billion in annualized mortgage originations and about $300 million billion ineligible mortgage portfolio of servicing have signed up for the FICO score 10 T. FICO 10 T for conforming mortgages will be rolled.

William J. Lansing: Based on the timeline of the FHFA.

William J. Lansing: In our software business, we delivered $197 million in Q2 revenue, up 8% from last year, driven by growth in on-premises and SaaS software, partially offset by decline in professional services. We continue to drive strong growth in ARR and NRR with expansion driven by increased customer usage. As shown on page 7, total ARR was up 14%, with platform ARR growing 32% and non-platform ARR growing 8%. Total NRR for the quarter, shown on page 8, was 112%.

William J. Lansing: And our software business, we delivered a $197 million in Q2 revenue up 8% from last year driven by growth in on premises and SaaS software, partially offset by a decline in professional services.

William J. Lansing: We continued to drive strong growth in IRR, and NR to our land and expand strategy with expand driven by increased customer usage.

William J. Lansing: As shown on page seven total IRR was up 14% with platform AAR growing 32% and non platform are growing 8%.

William J. Lansing: Total <unk> for the quarter shown on page eight was 112%.

Platform, NR was 126% and non platform and our <unk> was 106%.

William J. Lansing: Our total ACB bookings for the quarter was $17 million, our pipeline remains strong, especially with platform offerings.

William J. Lansing: Platform NRR was 126% and non-platform NRR was 106%. Our total ACB bookings for the quarter were $17 million. Our pipeline remains strong, especially with platform offerings. Before I turn it over to Steve to talk about financial details, I'd like to take a few moments to talk about the FICO World event we hosted last year. The four-day event included 1,200 attendees representing more than 400 companies from 60 countries.

William J. Lansing: Before I turn it over to Steve to talk about financial detail.

Steven P. Weber: I'd like to take a few moments to talk about the FICO World event, we hosted last year last week. The four day event included 1200 attendees representing more than 400 companies from 60 countries.

Steven P. Weber: FICO World brought together customers and prospective customers from around the globe to discuss the benefits of making real time decisions at scale through the power of the FICO platform.

Steven P. Weber: Current customers explain the benefits of improved profits increased customer acquisition and retention reduced costs growth and new product offerings and improved employee efficiency.

William J. Lansing: FICO World brought together customers and prospective customers from around the globe to discuss the benefits of making real-time decisions at scale through the power of the FICO platform. Current customers explained the benefits of improved profits, increased customer acquisition and retention, reduced costs, growth in new product offerings, and improved employee efficiency. Through FICO platform demonstrations and our innovation center, customers experience real examples of the variety of use cases that can be deployed using the FICO platform.

William J. Lansing: Through FICO platform demonstrations in our innovation center customers experienced real examples.

William J. Lansing: Of the variety of use cases that can be deployed using the FICO platform.

William J. Lansing: At FICO World, we announced several innovations.

William J. Lansing: We responded to market demand with an open API framework.

William J. Lansing: FICO marketplace open ecosystem and business composed ability together these innovations foster more collaborative environment by reducing silos and creating transparency into future outcomes. Some of the content from FICO world will be available in the coming weeks on our Youtube channel I'd encourage all of you to view the demonstrations and presentations to better understand.

William J. Lansing: <unk>, our customers' excitement around this innovative technology.

William J. Lansing: I'll talk about our outlook for the balance of the year, including our increased guidance, but first let me turn it to Steve for further details thanks will and good afternoon, everyone as.

William J. Lansing: At FICO World, we announced several innovations. We responded to market demand with an open API framework, an FICO Marketplace Open Ecosystem, and Business Composability. Together, these innovations foster a more collaborative environment by reducing silos and creating transparency into future outcomes. Some of the content from FICO World will be available in the coming weeks on our YouTube channel.

Steven P. Weber: As will mentioned we had another very good quarter with total revenue of $434 million, an increase of 14% over the prior year.

Steven P. Weber: <unk> segment revenues for the quarter were $237 million up 19% from Q2 of 2023 <unk>.

Steven P. Weber: <unk> revenues were up 28% driven primarily by mortgage originations revenues are.

Steven P. Weber: <unk> revenues were down 4% versus the prior year due to volume declines in our Myfico Dot com business.

William J. Lansing: Software revenues in the second quarter were $197 million.

William J. Lansing: Up 8% versus Q2 2023.

Steven P. Weber: I'd encourage all of you to view the demonstrations and presentations to better understand our customers' excitement around this innovative technology. I'll talk about our outlook for the balance of the year, including our increased guidance, but first, let me turn it to Steve for further details. Thanks, Will, and good afternoon, everyone.

William J. Lansing: Premises and SaaS software revenue grew year over year, while professional services revenues declined.

William J. Lansing: This quarter, 84% of total company revenues were derived from our Americas region, which is a combination of our North America and Latin America regions.

William J. Lansing: EMEA region generated 10% of revenues in the Asia Pacific region delivered 6%.

William J. Lansing: Our total software <unk> was $697 million, a 14% increase over the prior year.

Steven P. Weber: As Will mentioned, we had another very good quarter with total revenue of $434 million, an increase of 14% over the prior year. Score segment revenues for the quarter were $237 million, up 19% from Q2 of 2023. B2B revenues were up 28%, driven primarily by mortgage originations revenues.

William J. Lansing: Platform Anr topped $200 million this year for the first time at $201 million and represented 29% of our total Q2 up.

William J. Lansing: 25 up from 25% of the total.

William J. Lansing: In Q2 of 2023.

William J. Lansing: Platform <unk> grew 32% versus the prior year, while non platform <unk> grew 8% to $496 million this quarter.

Steven P. Weber: Our B2C revenues were down 4% versus the prior year due to volume declines in our MyFICO.com business. Software revenues in the second quarter were $197 million, up 8% versus Q2 2023. On-premises and SaaS software revenue grew year over year, while professional services revenues declined. This quarter, 84% of total company revenues were derived from our Americas region, which is a combination of our North America and Latin America regions. Our EMEA region generated 10% of revenues, and the Asia-Pacific region delivered 6%.

William J. Lansing: Our platform land and expand strategy continues to be very successful our dollar based net retention rate in the quarter was 112% platform NR was 126%, while our non platform NR was 106%.

William J. Lansing: That form an IRR was driven by a combination of new use cases and increased usage.

William J. Lansing: Non platform was driven by customers increased usage and by CPI price increases.

William J. Lansing: Our software ACB bookings for the quarter were $16 8 million as a reminder, ACD bookings include only the annual value of software sales and exclude professional services.

William J. Lansing: Turning to expenses, our total operating expenses were $239 million this quarter versus $221 million in the prior year.

William J. Lansing: Our current expenses are a 4% increase over the prior quarter.

Steven P. Weber: Our total software ARR was $697 million, a 14% increase over the prior year. Platform ARR topped $200 million this year for the first time at $201 million and represented 29% of our total Q2 ARR, up from 25% of the total in Q2 of 2023. Platform ARR grew 32% versus the prior year, while non-platform ARR grew 8% to $496 million this quarter. Our platform land and expand strategy continues to be very successful. Our dollar-based net retention rate in the quarter was one hundred twelve percent.

William J. Lansing: As we indicated last quarter, we made it we maintain focus on investments to accelerate development of the FICO platform.

William J. Lansing: And that incremental investment is relatively modest and built into our guidance.

William J. Lansing: Our non-GAAP operating margin as shown in our Reg G schedule was 53% for the quarter and that represents a 400 basis point increase from the same quarter last year.

William J. Lansing: GAAP net income this quarter was $130 million up 28% from the prior year's quarter.

William J. Lansing: Our non-GAAP net income was $154 million for the quarter up 27% in the prior year's quarter.

William J. Lansing: The effective tax rate for the quarter was 25%, we believe that our fiscal year 2024, net effective tax rate is expected to be around 22%, while our recurring tax rate is expected to be around 26% and as a reminder, the recurring tax rate is before any excess tax benefits and other discrete items recognized.

Steven P. Weber: Platform NRR was one hundred twenty six percent, while our non-platform NRR was one hundred six percent. Platform NRR was driven by a combination of new use cases and increased usage. Non-platform NRR was driven by customers' increased usage and by CPI price increases. Our software ACV bookings for the quarter were $16.8 million. As a reminder, ACV bookings include only the annual value of software sales and exclude professional services.

William J. Lansing: Free cash flow for the quarter was $61 6, million% to 30% decrease from the prior year.

William J. Lansing: Trailing 12 month free cash flow was 467% $467 million compared to $494 million in the prior quarter, we do expect free cash flow to accelerate from the Q2 level in the next two quarters.

William J. Lansing: At the end of the quarter, we had $177 million in cash and marketable investments.

William J. Lansing: Our total debt at quarter end was 2.04 billion with.

Steven P. Weber: Turning to expenses, our total operating expenses were $239 million this quarter versus $221 million in the prior year. Our current expenses are a 4% increase over the prior quarter. As we indicated last quarter, we maintain our focus on investment to accelerate the development of the FICO platform, and that incremental investment is relatively modest and built into our guidance. Our non-GAAP operating margin, as shown in our Reg G schedule, was 53% for the quarter, and that represents a 400 basis point increase from the same quarter last year.

William J. Lansing: With a weighted average interest rate of five 2%.

William J. Lansing: Currently 63% of our total debt is fixed rate.

William J. Lansing: Our floating rate debt is pre payable at any time, giving us the flexibility to use free cash flow to reduce outstanding floating rate debt balances in future periods.

William J. Lansing: In terms of return of capital, we did buyback 144000 shares in the second quarter at an average price of $1246 per share and at the end of the quarter, we still had the $367 million remaining on the board authorization.

William J. Lansing: And with that I'll turn it back to will for his thoughts on the rest of the year and to give the information on our increase in full year guidance.

Steven P. Weber: Gap net income this quarter was $130 million, up 28% from the prior year's quarter. Our non-GAAP net income was $154 million for the quarter, up 27% from the prior year's quarter. The effective tax rate for the quarter was 25%.

William J. Lansing: Thank you Steve.

William J. Lansing: Our strategy remains consistent despite an uncertain macroeconomic environment, we are experiencing strong growth in our scores business, even as the current rate environment has driven volume slower.

William J. Lansing: Throughout our business, we continue to invest in innovation. This is particularly evident as we see growing customer adoption and expanded use cases of FICO platform or.

Steven P. Weber: We believe that our fiscal year 2024 net effective tax rate is expected to be around 22%, while our recurring tax rate is expected to be around 26%. And as a reminder, the recurring tax rate is before any excess tax benefit and other discrete items. Free cash flow for the quarter was $61.6 million, a 30% decrease from the prior year.

William J. Lansing: Our customers are delighted to be able to optimize interactions with their end customers through data driven <unk> solutions that are executed in real time.

Speaker Change: I am pleased to report that today, we are raising our full year guidance as we enter the second half of our fiscal year, we're raising our full year revenue guidance to $1 69 billion.

William J. Lansing: GAAP net income is now expected to be $495 million.

Steven P. Weber: The trailing 12-month free cash flow was $467 million compared to $494 million in the prior quarter. We do expect free cash flow to accelerate from the Q2 level in the next two quarters. At the end of the quarter, we had $177 million in cash and marketable investments. Our total debt at quarter end was $2.04 billion with a weighted average interest rate of 5.2%. Currently, 63% of our total debt is fixed rate.

William J. Lansing: With GAAP earnings per share of $19 70.

William J. Lansing: non-GAAP net income is now expected to be $573 million with non-GAAP earnings per share of <unk> 20 to $22 80.

William J. Lansing: non-GAAP earnings per share of $22 80.

William J. Lansing: With that I will turn the call back to Dave to open the Q&A session.

Dave Singleton: Well. This concludes our prepared remarks, and we're now ready to take questions. Operator, Please open the lines.

Dave Singleton: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

William J. Lansing: For all of your questions. Please press star one again.

Steven P. Weber: Our floating rate debt is prepayable at any time, giving us the flexibility to use free cash flow to reduce outstanding floating rate debt balances in future periods. In terms of a return on capital, we did buy back 144,000 shares in the second quarter at an average price of $1,246 per share.

William J. Lansing: Please standby, while we compile the Q&A roster.

William J. Lansing: Our first question comes from Manav Patnaik.

Manav Shiv Patnaik: With Barclays. Your line is now open.

Manav Shiv Patnaik: Thank you good evening, maybe I'll just start with the software segment first will clearly we were at FICO World in your comments, both are pretty bullish but can you just help us appreciate or understand the.

William J. Lansing: And at the end of the quarter, we still had $367 million remaining on the board authorization. And with that, I'll turn it back to Will for his thoughts on the rest of the year and to give you information on our increase in the full year guide. Thank you, Steve.

Manav Shiv Patnaik: Second coordinator of deceleration on the platform side I think last quarter. You said there was some movement in the bookings the timing et cetera. So just help us if there is something more of that going on is 30% of new lending levels now just any help there would be appreciated.

William J. Lansing: Our strategy remains consistent despite an uncertain macroeconomic environment. We're experiencing strong growth in our scores business, even as the current rate environment has driven volumes lower. Throughout our business, we continue to invest in innovation. This is particularly evident as we see growing customer adoption and expanded use cases for the FICO platform. Our customers are delighted to be able to optimize interactions with their end customers through data-driven, composable solutions that are executed in real time.

Speaker Change: Yeah, absolutely. So as you know we had many many quarters of over 50% growth in the platform and then we have slowed to <unk> and now we are in the <unk> and I think thats, a reasonable and sustainable level for the foreseeable future.

Manav Shiv Patnaik: I think we had always anticipated some level of slowing just because.

Manav Shiv Patnaik: That number gets bigger that was inevitable and I think that's really all it is we're not seeing anything that's caused for any kind of concern or alarm our customers are buying the buying the platform. They are expanding the use cases once they've got the platform in.

William J. Lansing: I'm pleased to report that today we're raising our full-year guidance as we enter the second half of our fiscal year. We're raising our full-year revenue guidance to $1.69 billion. Gap net income is now expected to be $495 million, with gap earnings per share of $19.77.

Manav Shiv Patnaik: There's a little bit of timing issues around various deals, but I don't think anything really significant.

Manav Shiv Patnaik: I guess, it's probably worth pointing out that the second half of the year is always bigger than the first half and so so theres more to come this year and Manav I would just say we had a really difficult comp this quarter to last second quarter last year. The platform grew 60%. So we're growing more than 30% off of a pretty big number but it was a big step up last year in the second quarter.

Dave Singleton: Non-GAAP net income is now expected to be $573 million with non-GAAP earnings per share of $22.80. With that, I'll turn the call back to Dave to open the Q&A session. Thanks, Will. That concludes our prepared remarks. And we're now ready to take questions. Operator, please open the line. As a reminder, to ask a question, please press star one one on your telephone and wait for your name. For all your questions. Star 1-1 again.

Manav Shiv Patnaik: <unk>.

Manav: Okay got it thats helpful.

Speaker Change: Then maybe just one on the scores on the mortgage origination side.

Speaker Change: The moving pieces there Steve may be just how did volumes come in this quarter versus your expectations and then.

Speaker Change: When you think about the guidance range what are the moving pieces there as well please.

Steven P. Weber: Yes, I mean, how we guide we're pretty conservative we don't we're not banking on I think its getting better anytime soon I mean, I think even when we gave guidance last year people at that point, we're talking about six rate cuts in the year and we werent anticipating that so we the way we look at the guidance and no mortgage obviously, you're being such a big piece of that is.

Operator: Please stand by while we compile the Q&A. Our first question comes from Manav Patnaik. Barclays, your line is now open. Thank you. Good evening.

William J. Lansing: Maybe I'll just start with the software segment first. Well, you know, clearly, we were at FICO World and your comments and, you know, both are pretty bullish, but can you just help us appreciate or understand the, you know, second quarter in a row of deceleration on the platform side? I think last quarter you said there was some, you know, movement in the bookings or timing, etc. So just help us, you know, if there's something more of that going on at the 30% level now; just any help there would be appreciated. Yeah, absolutely.

Steven P. Weber: We don't we don't expect things to get better in our fiscal year and if they do great, but it's hard for us to depend on that because obviously, it's the <unk>.

Steven P. Weber: <unk> is going to be higher longer than anybody thought so that's kind of how we look at that so when they do come down we'll enjoy that benefit, but we don't try to put a timeline on that.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you well known for our next question.

Speaker Change: Our next question comes from.

Speaker Change: Faiza <unk> with Deutsche Bank. Your line is now open.

Faiza: Yes, hi, Thank you so I wanted to follow up on mortgage.

Faiza: You've taken obviously a lot of pricing successfully the last couple of years.

Faiza: And I know you have a long term strategic plan.

William J. Lansing: So, as you know, we had many, many quarters of over 50% growth on the platform, and then it slowed to the 40s, and now we're in the 30s. And I think that's a reasonable and sustainable level for the foreseeable future. I think we'd always anticipated some level of slowing down just because as the number gets bigger, that was inevitable. And I think that's really all it is. We're not seeing anything that's caused any kind of concern or alarm.

Faiza: Value creation here and Theres been some noise.

Faiza: Regulator to other other bodies I'm curious, how you think about that and what are some of the factors that you're considering as you think about our long term strategic plan on pricing.

Faiza: As we've discussed in the past.

Faiza: We are catching up from 30 years of frozen pricing and so on.

Speaker Change: Our putting our putting through price increases in this space is really a matter of trying to close the gap on.

Speaker Change: On the value that we provide relative to what we charge.

Steven P. Weber: Our customers are buying the platform, and they're expanding the use cases once they've got the platform in. There's a little bit of timing issues around various deals, but I don't think anything really significant. I guess it's probably worth pointing out that the second half of the year is always bigger than the first half. And so there's more to come this year. And Manav, I would just say we had a really difficult competition this quarter too.

Speaker Change: The way, we think about criticism because youre right every once in a while there is noise noise about price increases the way we think about it is transparency is our friend and so we have increasingly been willing and interested.

Speaker Change: To share exactly what our pricing is because it's such a small part of the overall bundle. So it's a concern whether it's from Congress or regulators or third party groups.

Speaker Change: Is about the level of <unk>.

Speaker Change: <unk> expense associated with a FICO mortgage for it's important for everyone to understand that we're talking about single digit dollars in a bundle that cost of consumer about $6000. So we pointed out the gigantic gap between what we charge in the bundle in which we reside and we.

Steven P. Weber: Second quarter last year, the platform grew 60%. So we're growing more than 30% off of a pretty big number. It was a big step up last year in the second quarter.

Steven P. Weber: Okay, got it. That's helpful. And then maybe just one on the mortgage origination side, or the moving pieces there, Steve, maybe just how did volumes come in this quarter versus your expectations? And then, you know, when you think about the guidance raised, like, what were the moving pieces there as well? Yeah, I mean, you know how we guide; we're pretty conservative.

Speaker Change: That that's the way to do it we think transparency is our friend.

Speaker Change: Great. Thank you and then just a follow up on other originations maybe you can talk about what youre seeing on the card and auto side in terms of volume versus price.

Speaker Change: Thank god, but overall environment like and maybe if you've adjusted your expectations.

Steven P. Weber: We don't, and we're not banking on things getting better anytime soon. I mean, I think even when we gave guidance last year, people at that point were talking about six rate cuts in the year, and we weren't anticipating that. So, you know, we, the way we look at the guidance and mortgages, obviously, being such a big piece of that is that we don't, we don't expect things to get better in our fiscal year. And if they do, great, but it's hard for us to, you know, depend on that, because obviously, you know, this is, rates are going to be higher longer than anybody thought.

Speaker Change: Our volumes just given the given the macro environment here.

Speaker Change: I don't know that we've really adjusted our expectations I think that what we're seeing is kind of in line with what we did expect and it is a function of the macro environment.

Speaker Change: As we pointed out we're down a little bit in auto and a little bit more in credit card and other but I don't think its any kind of surprised given the macro environment.

Speaker Change: Got it thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from.

Speaker Change: The line of.

Speaker Change: Surinder <unk> with Jefferies. Your line is now open.

Surinder: Thank you.

Steven P. Weber: So that's kind of how we look at that. So, you know, when they do come down, we'll enjoy that benefit, but we don't try to put a timeline on that. One moment for our next question. Faiza Alwy with Deutsche Bank. Your line is now open.

Surinder: I'd like to revisit the software business and more specifically just kind of the bookings.

Surinder: When you think about the client conversations that you've been having obviously.

Surinder: Quite positive, but how much should we attribute to macro because there has been an overall slowdown so.

Faiza Alwy: Yes, hi, thank you. So I wanted to follow up on mortgages. You know, you've obviously taken a lot of pricing successfully the last couple of years. And I know you have a long-term strategic plan of value creation here. But there's been some noise from, you know, regulators, other bodies.

Speaker Change: Is it the earlier commentary you guys.

Speaker Change: Hugh.

Surinder: <unk> is not macro late related to any expense.

Speaker Change: So I think that it's fair to put some of the explanation on macro environment, because what we're not seeing is losses to competition.

Speaker Change: While we are seeing is projects deferred or taking a little bit longer and so I think it's very fair to attribute some of that to the macro environment.

William J. Lansing: I'm curious how you think about that and what are some of the factors that you're considering as you think about your long-term strategic plan on pricing. Well, you know, as we've discussed in the past, we're catching up from 30 years of frozen pricing. And so, you know, our putting through price increases in this space is really a matter of trying to close the gap on the value that we provide relative to what we charge. The way we think about criticism, because you're right, every once in a while there is noise about price increases.

Speaker Change: Got it.

Speaker Change: And then I guess turning to the non platform piece.

Speaker Change: <unk>.

Speaker Change: When you think about volumes versus pricing I think you mentioned CPI, but just any other color that you can provide us just mostly growth within like Falcon or.

Speaker Change: How does pricing work here.

Speaker Change: Is it just.

Speaker Change: CPI is the right number and that's how it should continue or how should we think about that.

Speaker Change: So as you know the non platform business very mature and we're deeply embedded.

William J. Lansing: The way we think about it is that transparency is our friend. And so we have increasingly been willing and interested to share exactly what our pricing is because it's such a small part of the overall bundle. So if the concern, whether it's from Congress or regulators or third-party groups, is about the level of expense associated with the FICO mortgage score, it's important for everyone to understand that we're talking about single-digit dollars in a bundle that costs a consumer about $6,000. So it's, you know, we point out the gigantic gap between what we charge and the bundle in which we reside. And we think that that's the best way to do it.

Speaker Change: And yet our customers preferred often prefer to renew and renew and renew and so theres a cycle multiple renewals typically associated with.

Speaker Change: With our license software with our and with our legacy and non platform software.

Speaker Change: Our philosophy is to not push the limits on pricing there.

Speaker Change: The customers are the same customers, who are buying platform from us and customers that will have a relationship with for the next 20 or 30 years and so it's not about harvesting and gouging.

Speaker Change: We raised our prices to cover costs of adding features and functionality in cyber security and keeping the product current.

Speaker Change: But we're not really.

Speaker Change: We're not really pushing the limits of what could be done on price, there and don't really intend to.

Speaker Change: Got it thank.

Speaker Change: Thank you I'll get back in the queue.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from.

Kyle: Line of Kyle.

Speaker Change: Kyle Peterson with Needham Your line is now open.

William J. Lansing: We think transparency is our friend. Great, Thank you. And then just to follow up on, you know, other originations, maybe you can talk about, you know, what you're seeing on the card and auto side in terms of volumes versus, versus pricing, sort of what the overall environment is like, and maybe if you've adjusted your expectations for volumes, just given the macro environment here. I don't know that we've really adjusted our expectations.

Kyle David Peterson: Great. Good afternoon, guys. Thanks for taking the questions.

Kyle David Peterson: Wanted to start on capital return.

Kyle David Peterson: So it looks like you guys.

Kyle David Peterson: <unk> bought back a little bit more.

Kyle David Peterson: This past quarter in the first quarter.

Kyle David Peterson: How should we think about.

Kyle David Peterson: The pace of buybacks in the back half of the year obviously.

Kyle David Peterson: A bit of a pullback in the shares and so with the market and such and then also just given some of your comments on potential for free cash flow to accelerate as the year progresses, just going on.

William J. Lansing: I think that what we're seeing is kind of in line with what we did expect, and it is a function of the macro environment. You know, as we pointed out, we're down a little bit in auto and a little bit more in credit card and others, but I don't think it's any kind of surprise given the macro environment.

Kyle David Peterson: You'll get your opinion on how you guys are thinking about that over the next few quarters.

Kyle David Peterson: We remain as committed to buyback as we have ever been and it is our intent to continue to spend at least our free cash flow and often in excess of our free cash flow on buyback every year and I don't expect that would change.

William J. Lansing: Thank you. Thank you. One moment for our next question comes from the line. Manav Patnaik, Faiza Alwy, Steven Weber, Kyle Peterson, John Mazzone, Manav Patnaik, Faiza Alwy, Kevin Lansing, Steven Weber, Manav Patnaik, Jeffrey Meuler, Faiza Alwy, Thank you.

Kyle David Peterson: Our leverage has slipped a bit as our as our earnings have gone up.

Kyle David Peterson: I guess, that's a that's a happy bonus of being more profitable.

Kyle David Peterson: And in the fullness of time Youll see that reflected in increased buyback.

Speaker Change: Got it.

Speaker Change: That's helpful.

Speaker Change: Just a follow up.

Speaker Change: I guess on the professional services piece of the business.

William J. Lansing: I'd like to revisit the software business and, more specifically, just kind of the booking. When you think about the client conversations that you've been having, obviously, quite positive. But how much should we attribute to macro? Because there has been an overall slowdown, so is the earlier commentary that Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, I think that it's fair to put some of the explanation on the macro environment because what we're not seeing is losses to competition.

Speaker Change: I guess that that revenues falling off a bit I get that.

Speaker Change: Lower lower margin, but you know just wanted to get your sense as to kind of is this call. It 19.

Speaker Change: $22 million a quarter is that kind of a good range to use moving forward given the mix of the business.

Speaker Change: Or selling or was there anything kind of onetime in this past quarter.

Speaker Change: The drag that down a bit.

Speaker Change: Hello.

Speaker Change: Yes.

Speaker Change: I think it's a reasonable range to anticipate going forward.

Speaker Change: We love our professional services and yet.

Speaker Change: We're not.

Speaker Change: <unk> services company first and foremost, we're a software company and so our goal with professional services is to provide.

William J. Lansing: What we are seeing is projects deferred or taking a little bit longer. And so I think it's very fair to attribute some of that to the macro environment. Unknown Attendee And then, I guess, turning to the non-platform piece.

Speaker Change: Thus PFS two.

Speaker Change: Manage quality installs and keep our customers happy.

Speaker Change: We're also delighted to have partners do the installation from us and we're bringing up partners to do some of that work I don't imagine that our PFS will shrink much more than it already has as you know it's come down quite a bit and.

William J. Lansing: When you think about volumes versus pricing, I think you mentioned CPI, but just any other color that you can provide if it's mostly growth within like Falcon or something. How does pricing work here? Is it just that CPI is the right number, and that's how it should continue, or how should we think about that?

Speaker Change: And we're probably pretty close to.

Speaker Change: I think we're at kind of a base level that it would be hard to imagine volume below.

Speaker Change: Got it that's good color thanks, guys.

Speaker Change: Thank you one moment for our next question.

William J. Lansing: You know, as you know, the non-platform business is very mature, and we're deeply embedded, and yet, our customers often prefer to renew and renew and renew, and so there's a cycle of multiple renewals typically associated with our licensed software and with our legacy and non-platform software. What our philosophy is is to not push the limits on pricing there. We These are the customers are the same customers who are buying platforms from us and customers that will have a relationship with us for the next 20 or 30 years. And so it's not about harvesting and gouging.

Speaker Change: Our next question comes from the line of.

Speaker Change: Ashish <unk> with RBC. Your line is now open.

ashish: Hi, Thanks for taking my question I just had a quick question on the expense trajectory I was wondering what.

ashish: What should we expect there both in terms of either sequentially or year on year growth in expenses for the rest of the year.

Speaker Change: Yes, so we had.

Speaker Change: Okay.

ashish: We said we had FICO world this quarter. So there's a that's a pretty significant expense for us. So youll see an increase in our Q3 spending by a little bit.

ashish: Associated with that and then the fourth quarter would probably be relatively flat to that or maybe even down a little bit.

William J. Lansing: You know, we raise our prices to cover the costs of adding features and functionality and cybersecurity and keeping the product current, but we're not really pushing the limits of what could be done on price there and don't really intend to. Got it. Thank you. One moment for our next question. Our next question comes from the line, Kyle Peterson with Needham, your line.

ashish: But we don't expect any significant uptick in expenses the rest of the year. It really it's basically due to the.

ashish: In fact, we will be held this quarter.

Speaker Change: That's helpful color and maybe just from a modeling perspective.

ashish: On Prem software again, the emphasis there that's maybe one of the reasons why that piece of the software revenue has been muted how should we think about that going forward with any color.

Kyle David Peterson: Great. Good afternoon, guys. Thanks for taking the questions. I wanted to start on capital return.

William J. Lansing: Obviously, it looks like you guys bought back a little bit more this past quarter than the first quarter. But, you know, how should we think about the pace of buybacks, you know, in the back half of the year? Obviously, you've seen a bit of a pullback in the shares, you know, with the market and such, and then also just giving some of your comments on the potential for free cash flow to accelerate as the year progresses.

ashish: But.

ashish: On Prem software.

ashish: Yes.

Speaker Change: So we're focused on where cloud first right. So we really are focused in the cloud, but if our customers want to want to run it on prem that we'll sell it to them that way there, but I would expect that.

Speaker Change: The untracked piece is probably not going to draw a lot but.

Speaker Change: But it's probably not going to shrink a lot either because a lot of those are deeply embedded in there is going to take years to to move to the cloud.

Speaker Change: That's helpful color. Thank you.

Speaker Change: Thank you one moment for our next question.

William J. Lansing: Just want to, you know, get your opinion on how you guys are thinking about that. We remain as committed to buyback as we have ever been, and it is our intent to continue to spend at least our free cash flow and often in excess of our free cash flow on buyback every year, and I don't expect that to change. Our leverage has flipped a bit as our earnings have gone up, and I guess that's a happy bonus of being more profitable, and in the fullness of time, you'll see that reflected in increased buybacks. That makes sense. And It's helpful.

Speaker Change: Our next question comes from.

Speaker Change: Jeff Miller with Baird. Your line is now open.

Jeff Miller: Yes. Thank you good afternoon. So I wanted to go back to the card Pilon and other origination revenue down nine I think the majority of that card. So is pricing a positive contributor to that line and if so just based upon the bureaus that have reported thus far it doesn't seem like card volumes.

Speaker Change: Are down that much but.

Kyle David Peterson: And just a follow up, you know, I guess in the professional services piece of the business, you know, revenues are falling off a bit. I get that it's, you know, lower, lower margin, but you just want to get your senses on kind of what this is. Call it 19 to 22 million a quarter. Is that kind of a good range to use moving forward given the mix of the business that you guys are selling, or was there something kind of unusual in this past quarter that dragged it down a bit below? I think it's a reasonable range to expect going forward. We love our professional services.

Speaker Change: Well so yes.

Speaker Change: It's a little apples and oranges. So this is just the originations piece I mean, our card in total is not down that much because we have a lot of the pre screen.

Speaker Change: And the account management that so the scores are not down that this is just the origination subset of that theres very low pricing in it so.

Speaker Change: It's probably when you take all that into consideration.

Speaker Change: I think it's hard to it's hard to compare our numbers are actually across the board. What the Bureau is put out but things like card every bureau has a different subset of banks.

Speaker Change: Subset of what we have so there could be a lot of different.

Speaker Change: Different things happening at.

Speaker Change: At different banks so.

Speaker Change: This is just on the origination piece.

William J. Lansing: And yet, you know, we're not a professional services company. First and foremost, we're a software company. And so our goal with professional services is to provide enough PS to manage quality installs and keep our customers happy. We're also delighted to have partners do the installation for us, and we're bringing partners in to do some of that work. I don't imagine that our PS will shrink much more than it already has.

Speaker Change: Okay, and then at FICO World, you talked a bit about it.

Speaker Change: Thanks, Brian.

Speaker Change: <unk> platform clients, but maybe.

Speaker Change: Maybe talk through like.

Speaker Change: How many of your clients.

Speaker Change: Clients have a single use case.

Speaker Change: And then of that.

Speaker Change: How many of them just fine down within the last year and kind of like what the typical path forward is for that broadening out their use case expansion and how long it typically takes.

Kyle David Peterson: As you know, it's come down quite a bit, and we're probably pretty close to a we're I think we're at kind of a base level that it would be hard to imagine going below. Got it. That's a good call.

Speaker Change: So.

Speaker Change: Depending on how you count we're antibody 130 of the top 300 financial institutions globally.

Speaker Change: And of that.

Speaker Change: Say, 40% or so are on their first use case, maybe a little bit more than that.

Operator: One moment for our next question. Next question. Unknown Attendee, Ashish Sabadra with RBC, your line's, Thanks for taking my question.

Speaker Change: And how many of those like just landed with you in the last year and if you can just kind of like talk about the expansion pack.

Ashish Sabadra: I just had a quick question on the expense trajectory. I was wondering what we should expect there both in terms of either sequential or year-on-year growth and expenses for the rest of the year. Yeah, so we had, as we said, FICA World this quarter.

Speaker Change: But I would take most of them have landed in the last year.

Speaker Change: <unk>.

Speaker Change: The very typical.

Speaker Change: Pat This is for the single use cases as to eventually move to multiple use cases and so the ones that are still on one are typically the most recent.

Steven P. Weber: So there's a pretty significant expense for us. So you'll see an increase in our Q3 spending by a little bit that's associated with that. And then the fourth quarter would probably be relatively flat or better, maybe even down a little bit.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change: Okay.

Speaker Change: Our next question comes from.

Steven P. Weber: But we don't expect any significant uptick in expenses the rest of the year. Really, it's basically due to the FICA World being held this quarter. That's a helpful color.

Speaker Change: George Tong with Goldman Sachs. Your line is now open.

Keen Fai Tong: Hi, Thanks, good afternoon.

Keen Fai Tong: In scores Youre catching up from 30 years of frozen thing to close the gap with what you charge yes.

Ashish Sabadra: And maybe just from a modeling perspective, the on-prem software, again, the de-emphasis there, that's maybe one of the reasons why that piece of the software review has been muted. How should we think about that going forward? about the On-Prem software?

Keen Fai Tong: You are closing the gap more quickly with mortgage them with cards and autos currently to what extent and pricing in autos in cards close the gap at the same pace as the mortgages over time, what are some of the considerations.

George Tong: Well.

George Tong: As we've talked about in the past, we take the entire portfolio scores every year and we evaluate it from top to bottom thinking through what is the elasticity of demand for that particular kind of a score.

Steven P. Weber: Yes. So I mean, we're focused on we're the cloud first, right? So we really are focused on the cloud, but if our customers want to want to run it on premises, we'll sell it to them that way there. But I would expect that the on-premise piece is probably not going to grow a lot. But it's probably not going to shrink a lot either, because a lot of those are deeply embedded, and it's gonna take years to move them to the cloud.

George Tong: And where should the scores prices move by CPI.

George Tong: Not more than that and where should they move more than that and so youre going to see variation in the portfolio always I would never expect for us to raise prices. The same advantage across all scores. So yes, you could continue to expect them to be different.

Steven P. Weber: Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, One moment for our next question. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, Jeff Moeller with Bayer, Jelanis.

Speaker Change: Okay got it that's helpful.

Speaker Change: And then with respect to the software business you saw 32% platform <unk>.

George Tong: Growth in the quarter from both land and expand and you break that down how much of that growth is coming from new business wins versus wallet penetration from existing customers.

George Tong: Yes, it's hard to do that charge.

George Tong: You kind of back into it a little bit by looking at the AAR versus the ban IRR, but we don't have the detail.

George Tong: To talk about use cases versus usage.

George Tong: I guess, maybe then qualitatively would you say youre more in land mode or expand mode.

Jeffrey P. Meuler: Yeah, thank you. Good afternoon. So I want to go back to the card P loan and other origination revenue down nine. I think the majority of that's card. So is pricing a positive contributor to that line? And if so, just based upon the bureaus that have reported thus far, it doesn't seem like card volume is down that much, but I love you. Well, so yeah. It's a bit of apples and oranges

Speaker Change: Well I mean, it's fair I mean, where we are.

Speaker Change: Trying to get as much business as we can landed but a lot of it it's a lot easier to expand once it's in he wants. It then they find their own use cases and a lot of time. So a lot of our growth is coming from expansion because a lot of the initial use cases are really small theyre coming in and we had a very small amount and then expanding off of that and Youre on the right question I think whether it's today or next quarter or the <unk>.

Speaker Change: Quarter after that expand will exceed land sooner or later.

Speaker Change: That's inevitable that's anticipated thats coming I don't think were quite at the tipping point, yet I think land, probably still exceeds expansive I'm not sure.

Steven P. Weber: So this is just the originations piece. I mean, our card in total is not down that much because we have a lot of, you know, the prescreen and in account management. So the scores are not down that much. This is just the origination subset of that. There's very low pricing in it.

Speaker Change: Got it that's helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: I'm showing no further questions at this time I would now like to turn it back to Dave Singleton for closing remarks.

Dave Singleton: Did you want to check just one more time Simon might be in the queue for a question that he just popped in the last slide we do have a question from Simon <unk> with Redburn.

Steven P. Weber: So it's, you know, it's probably when you take all that into consideration. I think you'll find it hard to compare our numbers actually across the board to what the Bureau's put out. But I think, like cards, every Bureau has a different subset of banks. You know, a subset of what we have.

Speaker Change: Atlantic.

Speaker Change: Your line is now open Simon.

Simon: Hi, Thanks for taking my question.

Simon: And just squeezing me in just the last second half.

Simon: I wanted to ask a couple of questions. The first group.

Steven P. Weber: So, there could be a lot of different, you know, different things happening at different banks. So this is just on the origination piece. Okay, and then at Psycho World, you talked a bit about enterprise platform clients, but maybe you could talk through like how many of your platform clients have a single use case? And then of those, how many of them just signed on within the last year, and kind of like what the typical path forward is for them broadening out their use case expansion and how long it typically takes. Thanks.

Simon: On the software side.

Simon: How should I think about the longer term sustainable retention rates for both platform and on platform.

Speaker Change: Yes, so the.

Speaker Change: The net retention rate.

Speaker Change: Non platform is probably going to dip below a 100% at some point. These are legacy products that at some point.

Speaker Change: Tripped over to the platform. So that's been running probably a little slightly above 100% annual part of you there for a while but it could dip below 100% at some point.

Speaker Change: And that retention rate on the on the platform. It's been very strong as long as we reported it. So it can vary obviously quarter to quarter and Theres no real trend to what you've seen.

Jeffrey P. Meuler: So we're, you know, depending on how you count it, we're in about 130 of the top 300 financial institutions globally. And of that, I'd say 40% or so are on their first use case, maybe a little bit more than that. And how many of those like just landed with you in the last year?

Speaker Change: Some quarters, it's been as low as in the 100 teens.

Speaker Change: And as high as 140, plus but we do see continually that all of the customers on the platform.

Speaker Change: Almost without fail use more of the.

Speaker Change: Following year than the previous year. So there's still a lot of room to expand on that and we think thats going to last for quite a while.

William J. Lansing: And if you can just kind of talk about the expansion path. What I would say most of them have landed in the last year. The very typical path is even for the single use cases is to eventually move to multiple use cases. And so the ones that are still on one are typically the most recent.

Speaker Change: Okay, great and just as a follow up.

Speaker Change: I mean, you've managed to grow this business pretty rapidly with with minimal sort of expense growth recently I'm just thinking when we're thinking out over the next decade, what are the kind of key investment areas you are looking at and.

Jeffrey P. Meuler: Okay, thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our next question comes from George Tong with Goldman Sachs. Your line is now open.

Speaker Change: And how do we extrapolate that to thinking about the.

Speaker Change: Durable expense growth in this business.

Keen Fai Tong: Hi, thanks. Good afternoon. In scores, you're catching up from 30 years of frozen pricing to close the gap with what you charge. You're closing the gap more quickly with mortgages than with cards and autos currently. To what extent can pricing for autos and cards close the gap at the same pace as in mortgages over time? What are some of the considerations?

Speaker Change: The.

Speaker Change: Kind of a key expense.

Speaker Change: I would say growth I wouldn't growth is probably the wrong word I would say I think we're happy with kind of the expense rates that we have and if anything they will go down over time, but the places where we're spending that money from an R&D standpoint are.

Speaker Change: On the product on the ecosystem in the marketplace and that side of the house and then I think we also have to think a lot about broadening our distribution because as you know we have very limited direct distribution and we have a reasonably nascent indirect partner distribution channel. So.

William J. Lansing: Well, you know, as we've talked about in the past, we take the entire portfolio of scores every year, and we evaluate it from top to bottom, thinking through what is the elasticity of demand for that particular kind of score? And, you know, where should the prices of scores move by CPI and not more than that? And where should they move more than that?

Speaker Change: There will be more investment on both direct and indirect sales in coming years.

William J. Lansing: And so, you know, you're going to see variation in the portfolio always. I would never expect us to raise prices the same amount across all scores. So, yeah, you could continue to expect them to be different. Okay, I got it. And then with respect to the software business, you saw 32% platform AR growth in the quarter from both land and expand. Can you break that down? How much of that growth is coming from new business wins versus wallet penetration from existing customers? Yeah, it's hard to do that, George.

Speaker Change: That's great thanks very much.

Speaker Change: Thank you and I'm showing no further questions at this time I will now turn it back to Dave Singleton for closing.

Dave Singleton: Hey, Thank you hey, thanks, everyone for the great questions and we had another great quarter.

Dave Singleton: That's about all I need to say thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Keen Fai Tong: I mean, you can kind of back into it a little bit by looking at the AR versus the ANRR, but we don't have the detail, you know, to talk about use cases versus usage. I guess maybe then qualitatively, would you say you're more in land mode or expand mode? Well, I mean, we're trying to get as much business as we can land, but it's a lot easier to expand.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: <unk>.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Keen Fai Tong: Once it's in, they find their own use cases a lot of times. So a lot of our growth is coming from expansion because a lot of the initial use cases are really small. They're coming in at a very small amount, and they're expanding off of that. And you're on the right question. I think whether it's today or next quarter or the quarter after that, space will exceed land sooner or later. That's inevitable. That's anticipated. That's coming.

Speaker Change: Okay.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: [music].

William J. Lansing: I don't think we're quite at the tipping point yet. I think land probably still exceeds expansion, but I'm not sure. Got it. That's helpful. Thank you. Thank you. I'm showing no further questions at this time. Now, I'd like to turn it back to Dave Singleton for closing. Did you want to check just one more time? Simon might be in the queue for a question that he just popped up on in the last five seconds.

Operator: We do have a question from Simon Clinch with Redbird Atlanta. Your line is now open, Simon. Hi, thanks for taking my question. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keen Tong, John Mazzone, Fair, Yeah, so the net retention rate on non-platform is probably going to dip below 100% at some point. These are legacy products that are going to shift over to the platform at some point. So that's been running, you know, probably just slightly above 100% and will probably be there for a while, but it could dip below 100% at some point. The net retention rate on the platform has been very strong as long as we've reported it. But it can obviously vary, obviously, quarter to quarter. There's no real trend to it.

Simon Clinch: You've seen, you know, some quarters it's been as low as in the, you know, 110; some quarters it's been as high as 140 plus. But we do see continually that all the customers on the platform, almost without fail, use more of the following year than they used the previous year. So there's still a lot of room to expand on that, and we think that's going to last quite a while. Great. And just as a follow-up, then, I mean, you're...

Simon Clinch: They've managed to grow this business pretty rapidly with minimal sort of expense growth recently. I'm just thinking, when we're thinking over the next decade, you know, what are the kind of key investment areas you're looking at? And, and how do we extrapolate that to thinking about, Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, The kind of a key expense.

William J. Lansing: I wouldn't say growth. I wouldn't. Growth is probably the wrong word. I think we're happy with kind of the expense rates that we have, and if anything, they'll go down over time, but the places where we're spending that money from an R&D standpoint are on the product, on the ecosystem, and the marketplace, and that side of the house. And then, I think we also have to think a lot about broadening our distribution, because, as you know, we have very limited direct distribution, and we Great, thanks very much.

Dave Singleton: Thank you, and I'm showing no further questions at this time. I'll now turn it back to Dave Singleton for closing. Hey, thank you.

Dave Singleton: Hey, thanks everyone for the great questions. And we had another great quarter. That's about all I need to say.

Operator: Thank you. This concludes today's conference call. Thank you for participating. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, and thank you for standing by.

Operator: Welcome to the Fair Isaac Second Quarter Earnings Conference. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, press star 1 1 on your telephone. You will then hear an automated message advising your hand. For all your questions, please press star 1-1 again. Please be advised that today's conference is over. I would now like to hand the conference over to your speaker today, Dave Singleton. Please go ahead.

Dave Singleton: Dave Singleton 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.

Dave Singleton: Certain statements made in this presentation are forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve many 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 risk factors and forward-looking statements portion of such filings. Copies are available from the SEC, from the FICO website, or from our Investor Relations team.

Speaker Change: [music].

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 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.

William J. Lansing: And a replay of this webcast will be available through April 25th, 2025. I will now turn the call over to our CEO, Will Lansing. Thanks, Dave.

William J. Lansing: And thank you everyone for joining us for our second quarter earnings call. In the investor relations section of our website, we posted some financial highlight slides that we'll be referencing during our presentation today. Today, I'll talk about this quarter's results and our increased guidance for the full fiscal year. We again delivered strong results, demonstrating the resiliency of our business with solid growth both in scores and in software. As shown on page 2 of the second quarter financial highlights, we reported Q2 revenues of $434 million, up 14% over the last year.

William J. Lansing: We delivered $130 million of GAAP net income in the quarter, up 28%. We delivered GAAP earnings of $5.16 per share, up 29% from the prior year. On a non-GAAP basis, Q2 net income was $154 million, with earnings of $6.14 per share, up 27% and 29%, respectively. We delivered free cash flow of $62 million in our second quarter and $182 million in the first half of fiscal 24. We continue to return capital to our shareholders through buybacks. In Q2, we repurchased 144,000 shares at an average price of $1,246 per share.

Speaker Change: Welcome to the <unk> second quarter earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: Last question during the session you will need to press star one one on your telephone.

Speaker Change: Here, an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to your Speaker today, Dave Singleton. Please go ahead.

Speaker Change: Yeah.

Speaker Change: Good afternoon, and thank you for attending FICO 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.

Speaker Change: 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 that business.

Speaker Change: Certain statements made in this presentation are forward looking under the private Securities Litigation Reform Act of 995.

Speaker Change: Those statements involve many risks and uncertainties that could cause actual results to differ materially.

Speaker Change: Copies are available from the SEC from the FICO website or from our Investor Relations team.

Speaker Change: This call will also include statements regarding certain non-GAAP financial measures.

Speaker Change: 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.

Speaker Change: The earnings release and regulation G schedule are available on the Investor Relations page of the company's website at FICO dot com or on the Sec's website at SEC Gov.

Speaker Change: And a replay of this webcast will be available through April 25, 2025, I will now turn the call over to our CEO will Lansing.

William J. Lansing: Thanks, Dave and thanks, everyone for joining us for our second quarter earnings call.

William J. Lansing: In the Investor Relations section of our website, we've posted some financial highlight slides that we'll be referencing during our presentation today.

William J. Lansing: Our pipeline remains strong, especially with platform offerings. Before I turn it over to Steve to talk about financial details, I'd like to take a few moments to talk about the FICO World event we hosted last year. The four-day event included 1200 attendees representing more than 400 companies from 60 countries. FICO World brought together customers and prospective customers from around the globe to discuss the benefits of making real-time decisions at scale through the power of the FICO platform.

William J. Lansing: Today I will talk about this quarter's results and our increased guidance for the full fiscal year.

Speaker Change: We again delivered strong results demonstrating the resiliency of our business with solid growth both in scores and in software.

Speaker Change: As shown on page two of the second quarter financial highlights, we reported Q2 revenues of $434 million up 14% over the last year we.

Speaker Change: We delivered $130 million of GAAP net income in the quarter up 28%.

Speaker Change: We delivered GAAP earnings of $5 16 per share up 29% from the prior year on a non-GAAP basis Q2, net income was $154 million with earnings of $6 14 per share up 27% and 29% respectively.

William J. Lansing: Current customers explain the benefits of improved profits, increased customer acquisition and retention, reduced costs, growth in new product offerings, and improved employee efficiency. Through FICO platform demonstrations and our innovation center, customers experience real examples of the variety of use cases that can be deployed using the FICO platform.

Speaker Change: We delivered free cash flow of $62 million in our second quarter and $182 million in the first half of fiscal 'twenty four.

Speaker Change: We continue to return capital to our shareholders through buybacks in Q2, we repurchased 144000 shares at an average price of $1246 per share.

Speaker Change: We have $367 million remaining on our board repurchase authorization.

Speaker Change: No.

Speaker Change: Our score segment on page six of the presentation, our second quarter revenues were $237 million up 19% versus the prior year.

Speaker Change: <unk> current quarter revenues were up 28% versus the prior year on the BDC side, the current quarter revenues were down 4% versus the prior year.

Speaker Change: Second quarter mortgage originations revenues were up 85% versus the prior year.

Speaker Change: Mortgage origination revenue accounted for 46% of <unk> revenue and 36% of total scores revenue.

Speaker Change: Auto originations revenues were down 1%, while credit card personal loan and other originations revenues were down 9% versus the prior year.

Speaker Change: We continue to drive strong adoption for FICO score 10 T for nonconforming mortgages since 2023 clients with over $100 billion in annualized mortgage originations and about 300 million billion.

Speaker Change: Ineligible mortgage portfolio servicing have signed up for the FICO score 10 T. FICO 10 T for conforming mortgages will be rolled out based on the timeline of the FHFA.

Speaker Change: In our software business, we delivered $197 million in Q2 revenue up 8% from last year driven by growth in on premises and SaaS software, partially offset by a decline in professional services.

Speaker Change: We continued to drive strong growth in IRR, and NR to our land and expand strategy with expand driven by increased customer usage.

Speaker Change: As shown on page seven total <unk> was up 14% with platform AAR growing 32% and platform are growing 8%.

Steven P. Weber: Our EMEA region generated 10% of revenues, and the Asia-Pacific region delivered 6%. Our total software ARR was $697 million, a 14% increase over the prior year. Platform ARR topped $200 million this year for the first time at $201 million and represented 29% of our total Q2 ARR, up from 25% of the total in Q2 of 2023. Platform ARR grew 32% versus the prior year, while non-platform ARR grew 8% to $496 million this quarter. Our platform land and expand strategy continues to be very successful. Our dollar-based net retention rate in the quarter was one hundred twelve percent. Platform NRR was one hundred twenty six percent.

Speaker Change: Total <unk> for the quarter shown on page eight was 112%.

Speaker Change: Platform, NR was 126% and non platform and our was 106%.

Speaker Change: Our total ACB bookings for the quarter were $17 million, our pipeline remains strong, especially with platform offerings.

Speaker Change: Before I turn it over to Steve to talk about financial detail.

Speaker Change: FICO World brought together customers and prospective customers from around the globe to discuss the benefits of making real time decisions at scale through the power of the FICO platform.

Steven P. Weber: Well, our non-platform NRR was one hundred six percent. Platform NRR was driven by a combination of new use cases and increased usage. Non-platform NRR was driven by customers' increased usage and by CPI price increases. Our software ACV bookings for the quarter were $16.8 million. As a reminder, ACV bookings include only the annual value of software sales and exclude professional services.

Speaker Change: Current customers explain the benefits of improved profits increased customer acquisition and retention reduced costs growth and new product offerings and improved employee efficiency.

Speaker Change: Through FICO platform demonstrations in our innovation center customers experienced real examples.

Speaker Change: Of the variety of use cases that can be deployed using the FICO platform.

Speaker Change: At FICO World, we announced several innovations.

Speaker Change: We responded to market demand with an open API framework.

Speaker Change: FICO marketplace open ecosystem and business composed ability together these innovations foster more collaborative environment by reducing silos and creating transparency into future outcomes. Some of the content from FICO world will be available in the coming weeks on our Youtube channel I'd encourage all of you to view the demonstrations and presentations to better understand.

Speaker Change: Stand our customers' excitement around this innovative technology.

Speaker Change: I'll talk about our outlook for the balance of the year, including our increased guidance, but first let me turn it to Steve for further details thanks will and good afternoon, everyone as.

Steven P. Weber: As will mentioned we had another very good quarter with total revenue of $434 million, an increase of 14% over the prior year.

Steven P. Weber: <unk> segment revenues for the quarter were $237 million up 19% from Q2 of 2023 <unk>.

Steven P. Weber: <unk> revenues were up 28% driven primarily by mortgage originations revenues.

Steven P. Weber: <unk> revenues were down 4% versus the prior year due to volume declines in our Myfico Dot com business.

Steven P. Weber: Software revenues in the second quarter were $197 million up 8% versus Q2 2023.

Steven P. Weber: Our premises and SaaS software revenue grew year over year, while professional services revenues declined.

Steven P. Weber: This quarter, 84% of total company revenues were derived from our Americas region, which is a combination of our North America and Latin America regions.

Steven P. Weber: EMEA region generated 10% of revenues in the Asia Pacific region delivered 6%.

Steven P. Weber: Our total software <unk> was $697 million.

Steven P. Weber: A 14% increase over the prior year.

Steven P. Weber: Platform Anr top $200 million this year for the first time at $201 million and represented 29% of our total Q2 <unk>.

Steven P. Weber: 25 up from 25% of the total.

Steven P. Weber: In Q2 of 2023.

Steven P. Weber: Platform <unk> grew 32% versus the prior year, while non platform <unk> grew 8% to $496 million this quarter.

Steven P. Weber: Our total debt at quarter end was $2.04 billion with a weighted average interest rate of 5.2%. Currently, 63% of our total debt is fixed rate. Our floating rate debt is prepayable at any time, giving us the flexibility to use free cash flow to reduce outstanding floating rate debt balances in future periods. In terms of a return on capital, we did buy back 144,000 shares in the second quarter at an average price of $1,246 per share.

Steven P. Weber: Our platform land and expand strategy continues to be very successful our dollar based net retention rate in the quarter was 112% platform NR was 126%, while our non platform NR was 106% plus.

Steven P. Weber: Platform NR was driven by a combination of new use cases and increased usage.

Steven P. Weber: Non platform was driven by customers increased usage and by CPI price increases.

Steven P. Weber: Our software ACB bookings for the quarter were $16 8 million.

Steven P. Weber: As a reminder, ACD bookings include only the annual value of software sales and exclude professional services.

Steven P. Weber: And at the end of the quarter, we still had $367 million remaining on the board authorization. And with that, I'll turn it back to Will for his thoughts on the rest of the year and to give you information on our increase in the full year guide. Thank you, Steve.

Steven P. Weber: Turning to expenses, our total operating expenses were $239 million this quarter versus $221 million in the prior year.

Steven P. Weber: Our current expenses are a 4% increase over the prior quarter.

Steven P. Weber: As we indicated last quarter, we made if we maintain focus on investments to accelerate development of the FICO platform.

Steven P. Weber: And that incremental investment is relatively modest and built into our guidance.

Steven P. Weber: Our non-GAAP operating margin as shown in our Reg G schedule was 53% for the quarter and that represents a 400 basis point increase from the same quarter last year.

Steven P. Weber: GAAP net income this quarter was $130 million up 28% from the prior year's quarter.

Steven P. Weber: Our non-GAAP net income was $154 million for the quarter up 27% in the prior year's quarter.

Steven P. Weber: The effective tax rate for the quarter was 25%, we believe that our fiscal year 2024, net effective tax rate is expected to be around 22%, while our recurring tax rate is expected to be around 26% and as a reminder, the recurring tax rate is before any excess tax benefits and other discrete items recognized.

William J. Lansing: Non-GAAP net income is now expected to be $573 million with non-GAAP earnings per share of $22.80. With that, I'll turn the call back to Dave to open the Q&A session. Thanks, Will. That concludes our prepared remarks. And we're now ready to take questions. Operator, please open the line. As a reminder, to ask a question, please press star one one on your telephone and wait for your name. For all your questions, press star 1-1 again.

Steven P. Weber: Free cash flow for the quarter was $61 6, million% to 30% decrease from the prior year.

Steven P. Weber: Trailing 12 month free cash flow was 467% $467 million compared to $494 million in the prior quarter, we do expect free cash flow to accelerate from the Q2 level in the next two quarters.

Steven P. Weber: At the end of the quarter, we had $177 million in cash and marketable investments.

Steven P. Weber: Our total debt at quarter end was $2.04 billion.

Steven P. Weber: With a weighted average interest rate of five 2%.

Dave Singleton: Please stand by while we compile the Q&A. Our first question comes from Manav Patnaik. Barclays, your line is now open. Thank you. Good evening.

Steven P. Weber: Currently 63% of our total debt is fixed rate.

Steven P. Weber: Our floating rate debt is pre payable at anytime, giving us the flexibility to use free cash flow to reduce outstanding floating rate debt balances in future periods.

Manav Shiv Patnaik: Maybe I'll just start with the software segment first. Well, you know, clearly, we were at FICO World, and your comments and you know, both are pretty bullish, but can you just help us appreciate or understand the, you know, second quarter in a row of deceleration on the platform side? I think last quarter you said there was some, you know, movement in the bookings or timing, etc. So just help us, you know, if there's something more of that going on, is 30% the new level now? Just any help there would be appreciated. Yeah, absolutely. So, as you know, we had many, many quarters of over 50% growth on the platform, and then it slowed to the 40s. And now we're in the 30s.

Steven P. Weber: In terms of return of capital we did buy back 144000 shares in the second quarter at an average price of $1246 per share and at the end of the quarter, we still had the $367 million remaining on the board authorization.

Steven P. Weber: And with that I'll turn it back to will for his thoughts on the rest of the year and to give the information on our increase in full year guidance.

William J. Lansing: Our strategy remains consistent despite an uncertain macroeconomic environment, we are experiencing strong growth in our scores business even at the current rate environment has driven volumes lower.

William J. Lansing: Throughout our business, we continue to invest in innovation. This is particularly evident as we see growing customer adoption and expanded use cases of FICO platform.

William J. Lansing: Our customers are delighted to be able to optimize interactions with their end customers through data driven <unk> solutions that are executed in real time.

William J. Lansing: And I think that's a reasonable and sustainable level for the foreseeable future. I think we'd always anticipated some level of slowing just because as the number gets bigger, that was inevitable. And I think that's really all it is. We're not seeing anything that's caused any kind of concern or alarm.

Steven P. Weber: GAAP net income is now expected to be 495 million with GAAP earnings per share of $19 70.

William J. Lansing: Our customers are buying the platform; they're expanding the use cases once they've got the platform in. There's a little bit of timing issues around various deals, but I don't think anything really significant. I, you know, I guess it's probably worth pointing out that the second half of the year is always bigger than the first half. And so, there's more to come this year.

Steven P. Weber: non-GAAP net income is now expected to be $573 million with non-GAAP earnings per share of <unk> 20 to $22 80.

Steven P. Weber: non-GAAP earnings per share of $22 80.

Steven P. Weber: With that I'll turn the call back to Dave to open the Q&A session.

Dave Singleton: Thanks will this concludes our prepared remarks, and we're now ready to take questions. Operator, Please open the lines.

Operator: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

William J. Lansing: And Manav, I would just say we had a really difficult conference quarter last year. In the second quarter last year, the platform grew 60%. So we're growing more than 30% off of a pretty big number. It was a big step up last year in the second quarter.

Speaker Change: Please standby, while we compile the Q&A roster.

Steven P. Weber: Our first question comes from Manav Patnaik.

Manav Shiv Patnaik: With Barclays. Your line is now open.

Manav Shiv Patnaik: Good evening, maybe I'll just start with the software segment first will clearly we were at FICO World in your comments.

Manav Shiv Patnaik: Both are pretty bullish but can you just help us appreciate or understand the second quarter in a row of deceleration on the platform side I think last quarter. You said there was some movement in the bookings the timing et cetera, So just help us.

Steven P. Weber: We don't, and we're not banking on things getting better anytime soon. I mean, I think even when we gave guidance last year, people at that point were talking about six rate cuts in the year, and we weren't anticipating that. So, you know, we, the way we look at the guidance and, you know, mortgages obviously being such a big piece of that is that we don't, we don't expect things to get better in our fiscal year. And if they do, great, but it's hard for us to, you know, depend on that because, obviously, you know, the rates are going to be higher longer than anybody thought.

Manav Shiv Patnaik: Is there something more of that going on is 30% the new level now just any help there would be appreciated.

Speaker Change #112: Yeah, absolutely. So as you know we had many many quarters of over 50% growth in the platform and then we have slowed to <unk> and now we're in the <unk> and I think thats, a reasonable and sustainable level for the foreseeable future.

Speaker Change: I think we'd always anticipated some level of slowing just because.

Speaker Change: That number gets bigger that was inevitable and I think that's really all it is we're not seeing anything that's caused for any kind of concern or alarm our customers are buying the buying the platform. They are expanding the use cases once they've got the platform in.

Speaker Change: There is a little bit of timing issues around various deals, but I don't think anything really significant.

Faiza Alwy: So that's kind of how we look at that. So, you know, when they do come down, we'll enjoy that benefit, but we don't try to put a timeline on that. One moment for our next question. Faiza Alwy with Deutsche Bank. Your line is now open.

Speaker Change: I guess, it's probably worth pointing out that the second half of the year is always bigger than the first half and so so theres more to come this year and Manav I would just say we had a really difficult comp this quarter to last second quarter last year. The platform grew 60%. So we're growing more than 30% off of a pretty big number but it was a big step up last year in the second quarter.

Faiza Alwy: Yes, hi, thank you. So I wanted to follow up on the mortgage. You know, you've obviously taken a lot of pricing successfully the last couple of years, and I know you have a long-term strategic plan of value creation here. And there's been some noise from, you know, regulators, other bodies. I'm curious, how do you think about that? And what are some of the factors that you're considering as you think about your long-term strategic plan on pricing?

Speaker Change: <unk>.

Manav Shiv Patnaik: Okay got it that's helpful and then.

Manav Shiv Patnaik: Maybe just one on the scores on the mortgage origination side or the moving pieces there Steve maybe just how did volumes come in this quarter versus your expectations and then.

Steven P. Weber: When you think about the guidance range what were the moving pieces there as well please.

Steven P. Weber: Yes, I mean, how we guide we're pretty conservative we don't we're not banking I think its getting better anytime soon I think even when we gave guidance last year people at that point, we're talking about six rate cuts in the year and we werent anticipating that so we the way we look at the guidance and a no mortgage obviously, you're being such a big piece of that is that.

William J. Lansing: Well, you know, as we've discussed in the past, we're catching up from 30 years of frozen pricing. And so, you know, our putting through price increases in this space is really a matter of trying to close the gap on the value that we provide relative to what we charge. The way we think about criticism, because you're right, every once in a while, there is noise about price increases.

Speaker Change: We don't expect things to get better in our fiscal year and if they do great, but it's hard for us to depend on that because obviously.

Speaker Change: The rate is going to be higher longer than everybody thought so that's kind of how we look at that so when they do come down we'll enjoy that benefit, but we don't try to put a timeline on that.

Speaker Change: Okay. Thank you.

William J. Lansing: The way we think about it is that transparency is our friend. And so we have increasingly been willing and interested to share exactly what our pricing is because it's such a small part of the overall bundle. So if the concern, whether it's from Congress or regulators or third-party groups, is about the level of expense associated with a FICO mortgage for, you know, it's important for everyone to understand that we're talking about single-digit dollars in a bundle that costs a consumer about $6,000. So it's, you know, we point out the gigantic gap between what we charge and the bundle in which we reside. And we think that that's the best way to do it.

Speaker Change: Yeah.

Speaker Change: Thank you well known for our next question.

Speaker Change: Our next question comes from.

Speaker Change: Faiza <unk> with Deutsche Bank. Your line is now open.

Faiza: Yes, hi, Thank you so I wanted to follow up on mortgage.

Faiza: You've taken obviously a lot of pricing successfully the last couple of years.

Faiza: And I know you have a long term strategic plan.

Faiza: The value creation here and there has been some noise.

Faiza: Our regulator to other other bodies I'm curious, how you think about that and what are some of the factors that you're considering as you think about our long term strategic plan on pricing.

Faiza: Well.

Faiza: As we've discussed in the past.

Faiza: We are catching up from 30 years of frozen pricing and so on.

Faiza: Our putting putting through price increases in this space is really a matter of trying to close the gap on.

Faiza: On the value that we provide relative to what we charge.

Faiza: The way, we think about criticism because youre right every once in a while there is noise noise about price increases the way we think about it is transparency is our friend and so we have increasingly been willing and interested.

Faiza: To share exactly what our pricing is because it's such a small part of the overall bundle. So it's a concern whether it's from Congress or regulators or third party groups.

Faiza: Is about the level of <unk>.

Faiza: Expense associated with a FICO mortgage for it's important for everyone to understand that we're talking about single digit dollars in a bundle that cost of consumer about $6000. So we point out the gigantic gap between what we charge in the bundle in which we reside and we.

William J. Lansing: You know, as we pointed out, we're down a little bit in auto and a little bit more in credit card and others, but I don't think it's any kind of surprise given the macro environment. Got it. Thank you. Thank you. One moment for our

Faiza: Think that Thats the way to do it we think transparency is our friend.

Operator: The next question comes from the line, [inaudible] Thank you. I'd like to revisit the software business, in more specifically, just kind of the booking. When you think about the client conversations that you've been having, obviously, quite positive. But how much should we attribute to macro? Because there has been an overall slowdown. So the earlier commentary that you know the photon is not macro late related to any extent, so I think that it's fair to put some of the explanation on the macro environment because what we're not seeing is losses to competition.

Speaker Change #115: Great. Thank you and then just a follow up on other originations maybe you can talk about what youre seeing on the card and auto side in terms of volume versus price.

Faiza: Thank god, but overall environment like and maybe if you've adjusted your expectations.

Faiza: Our volumes just given the given the macro environment here.

Speaker Change: I don't know that we've really adjusted our expectations I think that what we're seeing is kind of in line with what we did expect and it is a function of the macro environment.

Speaker Change: As we pointed out we're down a little bit in auto and a little bit more in credit card and other but I don't think its any kind of surprised given the macro environment.

William J. Lansing: What we are seeing is projects deferred or taking a little bit longer. And so I think it's very fair to attribute some of that to the macro environment. Got it. And then, I guess, turning to the non-platform piece.

Speaker Change #116: Got it thank you.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from.

Speaker Change: The line of.

Speaker Change: Surrenders than with Jefferies. Your line is now open.

Speaker Change: Yes.

William J. Lansing: When you think about volumes versus pricing, I think you mentioned CPI, but just any other color that you can provide is this mostly growth within, like Falcon or. How does pricing work here? Is CPI the right number, and that's how it should continue, or how should we think about that? You know, as you know, the non-platform business is very mature, and we're deeply embedded, and yet our customers often prefer to renew and renew and renew, and so there's a cycle of multiple renewals typically associated with our licensed software and with our legacy and non-platform software.

Surrenders: Thank you.

Surrenders: I'd like to revisit the software business and more specifically just kind of the bookings.

Jefferies: When you think about the client conversations that you've been having obviously.

Jefferies: Quite positive, but how much should we attribute to macro because there has been an overall slowdown so.

Surrenders: Is it the earlier commentary you guys.

Surrenders: You the slowdown is not macro late related to any extent.

Speaker Change: So I think that it's fair to put some of the explanation on macro environment, because what we're not seeing is losses to competition.

Surrenders: While we are seeing is projects deferred or taking a little bit longer and so I think it's very fair to attribute some of that to the macro environment.

William J. Lansing: You know, what our philosophy is, is not to push the limits on pricing there; we these are the customers are the same customers who are buying platforms from us and customers that we'll have a relationship with for the next 20 or 30 years. And so it's not about harvesting and gouging; we raise our prices to cover costs of adding features and functionality and cybersecurity and keeping the product current.

Speaker Change #100: Got it.

Surrenders: And then I guess turning to the non platform piece.

Surrenders: Yes.

Surrenders: When you think about.

Surrenders: Volumes versus pricing I think you mentioned CPI, but just any other color that you can provide is this mostly growth within like Falcon or.

Surrenders: How does pricing work here.

Surrenders: Is it just.

Surrenders: CPI is the right number and that's how it should continue or how should we think about that.

William J. Lansing: But we're not really pushing the limits of what could be done on price there and don't really intend to. Got it. Thank you. I'll get back to you. One moment for our next question. Our next question comes from the line, Kyle Peterson with Needham, your line.

Speaker Change #118: So as you know the non platform business very mature and we are deeply embedded.

Surrenders: And yet our customers preferred often prefer to renew and renew and renew and so there is a cycle multiple renewals typically associated with with our license software with our and with our legacy and non platform software.

Kyle David Peterson: Great. Good afternoon, guys. Thanks for taking the questions. I wanted to start on capital return.

William J. Lansing: Obviously, it looks like you guys bought back a little bit more this past quarter than the first quarter. But, you know, how should we think about the pace of buybacks, you know, in the back half of the year? Obviously, you've seen a bit of a pullback in the share market and such. And then also, just giving some of your comments on the potential for free cash flow to accelerate as the year progresses.

Surrenders: Our philosophy is to not push the limits on pricing there.

Surrenders: The customers are the same customers, who are buying platform from us and customers that will have a relationship with for the next 20 or 30 years and so it's not about harvesting and gouging.

Surrenders: We raised our prices to cover costs of adding features and functionality in cyber security and keeping the product current.

Surrenders: But we're not really.

William J. Lansing: Just want to, you know, get your opinion on how you guys are thinking about that over the next few quarters. We remain as committed to buybacks as we have ever been, and it is our intent to continue to spend at least our free cash flow and often in excess of our free cash flow on buybacks every year, and I don't expect that to change.

Surrenders: Not really pushing the limits of what could be done on price, there and don't really intend to.

Speaker Change #119: Got it.

Speaker Change #120: Thank you I'll get back in the queue.

Speaker Change #103: Thank you one moment for our next question.

Speaker Change: Our next question comes from.

Speaker Change: Your line of sight.

Speaker Change: Kyle Peterson with Needham Your line is now open.

Kyle David Peterson: Great. Good afternoon, guys. Thanks for taking my questions.

Kyle David Peterson: Wanted to start on capital return.

Kyle David Peterson: Our leverage has flipped a bit as our earnings have gone up, and I guess that's a happy bonus of being more profitable. And in the fullness of time, you'll see that reflected in increased buyback. Unknown Speaker That makes sense, and it's helpful.

Kyle David Peterson: So it looks like you guys.

Kyle David Peterson: <unk> bought back a little bit more.

Kyle David Peterson: Past quarters in the first quarter.

Kyle David Peterson: How should we think about.

Kyle David Peterson: The pace of buybacks in the back half of the year obviously.

William J. Lansing: And just a follow up, you know, in the professional services piece of the business, you know, I guess that revenues are falling off a bit. I get that it's, you know, lower, lower margin, but you just want to get your senses to kind of, is this, call it 19 to 22 million a quarter. Is that kind of a good range to use moving forward, given the mix of the business that you guys are selling, or was there something kind of unusual in this past quarter that dragged it down a bit below? I think it's a reasonable range to expect going forward. We love our professional services.

Kyle David Peterson: A bit of a pullback in the shares with market and such and then also just given some of your comments on potential for free cash flow to accelerate as the year progresses, just going to.

Kyle David Peterson: Get your opinion on how you guys are thinking about that over the next few quarters.

Kyle David Peterson: We remain as committed to buyback as we have ever been.

Kyle David Peterson: And it is our intent to continue to spend at.

Kyle David Peterson: At least our free cash flow and often in excess of our free cash flow on buyback every year and I don't expect that would change.

Kyle David Peterson: Our leverage has slipped a bit as our as our earnings have gone up and.

Kyle David Peterson: That's a that's a happy bonus of being more profitable and in the fullness of time Youll see that reflected in increased buyback.

Speaker Change: Got it.

Speaker Change: So that's helpful.

Speaker Change #121: And just a follow up I.

Speaker Change #104: And I guess on the professional services piece of the business.

Speaker Change: Net revenues falling off a bit I get that.

William J. Lansing: And we're bringing in partners to do some of that work. I don't imagine that our PS will shrink much more than it already has. As you know, it's come down quite a bit. And we're probably pretty close to where I think we're at, kind of a base level that it would be hard to imagine going below. Got it. That's a good call.

Speaker Change: Lower or margin, but just wanted to get your sense as to kind of is this call. It 19.

Speaker Change: $22 million a quarter is that kind of a good range to use.

Speaker Change: Forward given the mix of the business you guys are selling or was there anything kind of onetime in this past quarter that dragged it down a bit.

Operator: One moment for our next question. Next question: Ashish Sabadra, with RBC, your line's now.

Speaker Change: Hello.

Ashish Sabadra: Thanks for taking my question. I just had a quick question on the expense trajectory. I was wondering what we should expect there both in terms of either sequential or year-on-year growth in expenses for the rest of the year? Yeah, so we had, as we said, FICA World this quarter.

Speaker Change: Right.

Speaker Change #109: I think it's a reasonable range to anticipate going forward, we love our professional services and yet.

Speaker Change #105: We're not.

Speaker Change #105: Professional services company first and foremost, we're a software company and so our goal with professional services is to provide.

Speaker Change #105: PFS to.

Speaker Change: Manage quality installs and keep our customers happy.

Steven P. Weber: So there's a, you know, that's a pretty significant expense for us. So you'll see an increase in our Q3 revenue by a little bit that's associated with that. And then the fourth quarter would probably be relatively flat or better, maybe even down a little bit.

Speaker Change: I think we're at kind of a base level that it would be hard to imagine volume below.

Steven P. Weber: But we don't expect any significant uptick in expenses the rest of the year. Really, it's basically due to the FICA World being held this quarter. That's a helpful color.

Speaker Change #107: Got it that's good color thanks, guys.

Speaker Change #108: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of.

Speaker Change: Ashish <unk> with RBC. Your line is now open.

ashish: Thanks for taking my question I guess I had a quick question on the expense trajectory I was wondering what.

Steven P. Weber: And maybe just from a modeling perspective, the on-prem software, again, the de-emphasis there, that's maybe one of the reasons why that piece of the software review has been muted. How should we think about that going forward? about the On-Prem software?

ashish: What should we expect there both in terms of either sequential or year on year growth in expenses for the rest of the year.

Speaker Change: Yes, so we had.

Speaker Change: Okay.

ashish: We said we had FICO world this quarter. So there's a that's a pretty significant expense for us. So you will see an increase in our Q3 spending by a little bit.

Steven P. Weber: Yes. So I mean, we're focused on we're cloud first, right? So we really are focused on the cloud. But if our customers want to want to run it on premises, we'll sell it to them that way there.

ashish: Associated with that and then.

Speaker Change: In the fourth quarter would probably be relatively flat to that or maybe even down a little bit.

Speaker Change: But we don't expect any significant uptick in expenses the rest of the year. It really it's basically due to the.

Steven P. Weber: But I would expect that the on-premise piece is probably not going to grow a lot. But it's probably not going to shrink a lot either, because a lot of those are deeply embedded, and it's gonna take years to move them to the cloud. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Jeff Moeller with Bayer, Jelanis.

Speaker Change: In fact, we will be held this quarter.

Speaker Change: That's helpful color and maybe just from a modeling perspective.

Speaker Change: On Prem software again, the emphasis there that's maybe one of the reasons why that piece of the software revenue has been muted how should we think about that going forward with any color.

Speaker Change: But.

Speaker Change: On Prem software.

Speaker Change: Yes.

Speaker Change #110: So we're focused on where cloud first right. So we really are focused in the cloud, but if our customers want to want to run it on prem that we'll sell it to them that way there, but I would expect that.

Speaker Change: Im trapped piece is probably not going to draw a lot but.

Speaker Change: But it's probably not going to shrink a lot either because a lot of those are deeply embedded in there is going to take years to to move to the cloud.

Speaker Change: That's helpful color. Thank you.

Speaker Change #111: Thank you one moment for our next question.

Speaker Change #122: Our next question comes from.

Jeffrey P. Meuler: Jeff boiler with Baird. Your line is now open.

Jeffrey P. Meuler: Yes. Thank you good afternoon. So I wanted to go back to the card Pilon and other origination revenue down nine I think the majority of that card. So is pricing a positive contributor to that line and if so just based upon the bureaus that have reported thus far it doesn't seem like card volumes.

Jeffrey P. Meuler: Are down that much but.

Speaker Change: Well so yes.

Jeffrey P. Meuler: Yeah.

Jeffrey P. Meuler: It's a little apples and oranges. So this is just the originations piece I mean, our card in total is not down that much because we have a lot of the pre screen.

Jeffrey P. Meuler: And the account management that so the scores are not down that this is just the origination of a subset of that theres very low pricing in it so.

Steven P. Weber: So it's, you know, it's probably when you take all that into consideration. I think you'll find it hard to compare our numbers actually across the board to what the bureaus put out. But I think, like cards, every bureau has a different subset of banks. You know, a subset of what we have.

Jeffrey P. Meuler: It's probably when you take all that into consideration I think it's hard to it's hard to compare our numbers are actually across the board what the bureaus put out but things like card every bureau has a different subset of banks.

Jeffrey P. Meuler: So, there could be a lot of different, you know, different things happening at different banks. So this is just on the origination piece. Okay, and then at Psycho World, you talked a bit about enterprise platform clients, but maybe you could talk through like how many of your platform clients have a single use case? And then of those, how many of them just signed on within the last year, and kind of like what the typical path forward is for them broadening out their use case expansion and how long it typically takes.

Jeffrey P. Meuler: A subset of what we have so there could be a lot of difference.

Jeffrey P. Meuler: Different things happening at.

Jeffrey P. Meuler: At different banks so.

Jeffrey P. Meuler: This is just on the originations piece.

Jeffrey P. Meuler: Okay, and then at FICO World, you talked a bit about it.

Jeffrey P. Meuler: Thanks, Brian for the.

Jeffrey P. Meuler: Prize platform clients.

Jeffrey P. Meuler: Let me talk through them.

Jeffrey P. Meuler: How many of your clients.

Jeffrey P. Meuler: Clients have a single use case and then of those how many of them just fine down within the last year and kind of like what the typical path forward is for that broadening out their use case expansion and how long it typically takes.

Jeffrey P. Meuler: Thanks. So we're, you know, depending on how you count it, we're in about 130 of the top 300 financial institutions globally. And of that, I'd say 40% or so are on their first use case, maybe a little bit more than that. And how many of those just landed with you in the last year? And if you can just kind of like talk about the expansion path. Well, I would say most of them have landed in the last year.

Jeffrey P. Meuler: So.

Jeffrey P. Meuler: Depending on how you count we're antibody 130 of the top 300 financial institutions globally and of that I'd say, 40% or so are on their first use case, maybe a little bit more than that.

Speaker Change #123: Okay, and how many of those like just landed with you in the last year and if you can just kind of like talk about the expansion pack.

Jeffrey P. Meuler: I would say most of them have landed in the last year.

William J. Lansing: Yeah, I mean, there's, you know, the very typical path is, is even for the single use cases is to eventually move to multiple use cases. And so the ones that are still on one are typically the most recent. Okay, thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. Our next question comes from... George Tong with Goldman Sachs, your line is now open. Hi, thanks. Good afternoon.

Jeffrey P. Meuler: The very typical.

Jeffrey P. Meuler: This is for the single use cases as to eventually move to multiple use cases, and so the ones that are still on one are typically the most recent.

Speaker Change #101: Okay. Thank you.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.

Speaker Change #102: Our next question comes from.

Speaker Change #102: George Tong with Goldman Sachs. Your line is now open.

Keen Fai Tong: Hi, Thanks, good afternoon in.

Keen Fai Tong: In scores, you're catching up from 30 years of frozen pricing to close the gap with what you charge. You're closing the gap more quickly with mortgages than with cards and autos currently. To what extent can pricing for autos and cards close the gap at the same pace as in mortgages over time? What are some of the considerations?

Keen Fai Tong: In scores Youre catching up from 30 years of frozen pricing to close the gap with what you charge your.

Keen Fai Tong: You are closing the gap more quickly with mortgage then with cards and autos currently to what extent and pricing in autos in cards close the gap at the same pace as the mortgages over time, what are some of the considerations.

William J. Lansing: Well, you know, as we've talked about in the past, we take the entire portfolio of scores every year, and we evaluate it from top to bottom, thinking through what is the elasticity of demand for that particular kind of score? And, you know, where should the prices move by CPI and not more than that? And where should they move more than that? And so, you know, you're going to see variation in the portfolio. I would never expect us to raise prices by the same amount across all scores.

Keen Fai Tong: Well.

Keen Fai Tong: As we've talked about in the past, we take the entire portfolio scores every year and we evaluate it from top to bottom thinking through what is the elasticity of demand for that particular kind of a score.

Keen Fai Tong: And where should the scores prices move by CPI and <unk>.

Keen Fai Tong: Not more than that and where should they move more than that and so youre going to see variation in the portfolio always I would never expect for us to raise prices. The same <unk> source for us. So yes, you could continue to expect them to be different.

Keen Fai Tong: So, yeah, you could continue to expect them to be different. Okay, got it. And then, with respect to the software business, you saw 32% platform AR growth in the quarter from both land and expand. Can you break that down? How much of that growth is coming from new business wins versus wallet penetration from existing customers? Yeah, it's hard to do that, George.

Speaker Change: Okay got it that's helpful.

Speaker Change: And then with respect to the software business you saw 32% platform <unk>.

Speaker Change: Growth in the quarter from both land and expand can you break that down how much of that growth is coming from new business wins versus wallet penetration from existing customers.

William J. Lansing: I mean, you can kind of back into it a little bit by looking at the AR versus the ANRR. But we don't have the detail, you know, to talk about use cases versus usage. I guess, then, qualitatively, would you say you're more in land mode or expand mode?

Speaker Change: Yes, it's hard to do that charge.

Speaker Change: You kind of back into it a little bit by looking at the AAR versus that ban IRR, but we don't have the detail.

Speaker Change: To talk about use cases versus usage.

Speaker Change: I guess, maybe then qualitatively would you say youre more in land mode or expand mode.

William J. Lansing: Well, I mean, we're trying to get as much business as we can, but it's a lot easier to expand. Once it's in, they find their own use cases a lot of times. So a lot of our growth is coming from expansion because a lot of the initial use cases are really small. They come in at a very small amount, and they're expanding off of that. And you're on the right question.

Speaker Change: Well I mean, it's where we're trying to get as much business as we can landed but a lot of it it's a lot easier to expand once its in and once they find their own use cases and a lot of time. So a lot of our growth is coming from expansion because a lot of the initial use cases are really small theyre coming in and we had a very small amount and then expanding off of that and you are on the road.

Speaker Change: Question, I think whether it's today or next quarter or the quarter after that expand will exceed land sooner or later.

William J. Lansing: I think whether it's today or next quarter or the quarter after that, expanded space will exceed land sooner or later. That's inevitable. That's anticipated. That's coming. I don't think we're quite at the tipping point yet. I think land probably still exceeds expanded space.

Speaker Change: It's inevitable that as anticipated Thats coming I don't think were quite at the tipping point, yet I think land, probably still exceeds expanded I'm not sure.

William J. Lansing: I'm not sure. Got it. That's helpful. Thank you. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Dave Singleton for closing. Did you want to check just one more time?

Speaker Change #124: Got it that's helpful. Thank you.

Speaker Change #114: Thank you.

Speaker Change #114: I'm showing no further questions at this time I would now like to turn it back to Dave Singleton for closing remarks.

Dave Singleton: Did you want to check one more time Simon might be in the queue for a question and you just pop data in the last five seconds. We do have a question from Simon <unk> with Redburn.

Dave Singleton: Simon might be in the queue for a question that he just popped in during the last five seconds. We do have a question from Simon Clinch with Redbird Atlanta. Unknown Attendee. Your line is now open, Simon.

Speaker Change: Atlantic.

Speaker Change: Your line is now open Simon.

Simon Clinch: Hi, thanks for taking my question. Transcription by https://otter.ai. Yeah, so the net retention rate on a non-platform is probably going to dip below 100% at some point. These are legacy products that are, at some point, going to shift over to the platform.

Simon: Hi, Thanks for taking my question.

Simon: Squeezing me in just a second.

Simon: I wanted to ask a couple of questions. The first group.

Simon: On the software side.

Simon: How should I think about the longer term sustainable retention rates with this platform and on platform.

Speaker Change #106: Yes, so the.

Speaker Change #106: The net retention rate on a.

Speaker Change #106: Non platform is probably going to dip below a 100% at some point. These are legacy products that at some point you guys are going to shift over to the platform. So that's been running probably a little slightly above 100% handle the part of either for a while but it could dip below 100% at some point.

Steven P. Weber: So that's been running, you know, probably just slightly above 100%, and it'll probably be there for a while, but it could dip below 100% at some point. The net retention rate on the platform has been very strong as long as we've reported it. So it can vary, obviously, quarter to quarter; there's no real trend to it. You've seen, you know, some quarters it's been as low as, you know, 110; some quarters it's been as high as 140 plus.

Speaker Change: And that retention rate on the on the.

Speaker Change: Platform, it's been very strong as long as we reported it. So it can vary obviously quarter to quarter and Theres no real trend to what you've seen.

Speaker Change: Yes.

Speaker Change: It's been as low as in the 100 <unk>.

Speaker Change: It's been as high as 140, plus but we do see continually that all of the customers on the platform.

Steven P. Weber: But we do see continually that all the customers on the platform, almost without fail, use more of it the following year than they used the previous year. So there's still a lot of room to expand on that. We think that's going to last for quite a while.

Speaker Change: Almost without fail use more of the.

Speaker Change: The following year.

Speaker Change: Here, so there's still a lot of room to expand on that and we think thats going to last for quite a while.

William J. Lansing: Great. And just as a follow-up, Ben, I mean, you've managed to grow this business pretty rapidly with minimal sort of expense growth recently. I'm just thinking, when we're thinking over the next decade, you know, what are the kind of key investment areas you're looking at?

Speaker Change #117: Okay, great and just as a follow up.

Speaker Change: Yeah.

Speaker Change #113: <unk> managed to grow this business pretty rapidly with with minimal sort of expense growth recently I'm just thinking when we're thinking over the next decade, what are the kind of key investment areas Youre looking at and.

William J. Lansing: And how do we extrapolate that to thinking about, Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, John Mazzone, Fair Isaac Corp. Unknown Attendee, Keen Tong, Thomas Quinn, Yolanda Butler, Keon Haley, Dave Singleton, The the kind of a key expense. I would say growth, growth is probably the wrong word, I think we're happy with kind of the expense rates that we have, and if anything, they'll go down over time, but the places where we're spending that money from an R&D standpoint are on the product, on the ecosystem, and the marketplace, and that side of the house, and then I think we also have to think a lot about broadening our distribution, because as you know, we have very limited direct distribution, and we have a reasonably nascent indirect partner distribution channel, so there will be more investment on both direct and indirect, sales in coming years.

Speaker Change: And how do we extrapolate that to thinking about.

Speaker Change: Durable expense growth in this business.

Speaker Change: The.

Speaker Change: Kind of a key expense.

Speaker Change: I would say growth I wouldn't growth is probably the wrong word I would say I think we're happy with kind of the expense rates that we have and if anything they'll go down over time, but the places where we're spending that money from an R&D standpoint.

Speaker Change: There will be more investment on both direct and indirect sales in coming years.

Dave Singleton: Great, thanks very much. Thank you, and I'm showing no further questions at this time. I'll now turn it back to Dave Singleton for closing. Hey, thanks. Hey, thanks, everyone, for the great questions. And we had another great quarter. That's about all I need to say. Thank you. This concludes today's conference call. Thank you for participating.

Speaker Change: That's great thanks very much.

Speaker Change: Thank you and I'm showing no further questions at this time I will now turn it back to Dave Singleton for closing.

Dave Singleton: Hey, Thank you hey, thanks, everyone for the great questions and we had another great quarter.

Dave Singleton: That's about all I need to say thank you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

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