Q2 2025 Fair Isaac Corp Earnings Call
Operator: Good day, and thank you for standing by.
Good day, and thank you for standing by and welcome to the second quarter 2025, Michael Earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session I'll need to press star one on your telephone you will then hear an automated message if I see your hand is raised to Australia. Your question. Please press.
Operator: Welcome to the second quarter 2025 FICO Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message device when your hand is raised. To withdraw your question, please press star 11 again.
Operator: Please be advised, today's conference is being recorded.
Speaker Change: Darwin one again, please be advised today's conference is being recorded I would now like to hand, the comps over to your speaker today, Dave Singleton. Please go ahead.
Dave Singleton: I would now like to hand the conference over to 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.
Speaker Change: Good afternoon, and thank you for attending <unk> second quarter earnings call I'm, David Singleton, Vice President of Investor Relations and I'm joined today by our CEO will Lansing, our CFO Steve Weber.
Speaker Change: 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: On this call, management will also discuss results in comparison with the prior quarter to facilitate an understanding of the run rate of the business. Certain statements made in this presentation are forward-looking under the Private Securities Litigation Reform Act of 1995. Those statements involve any risks and uncertainties that could cause actual results to differ materially. Information concerning these risks and uncertainties is contained in the company's filings with the SEC, particularly in the risks. forward 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: 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: Information concerning these risks and uncertainties is contained in the company's filings with the SEC, particularly in the risks.
Speaker Change: And forward looking statements portion of such filings.
Speaker Change: Copies are available from the SEC from the FICO website or from our Investor Relations team.
Dave Singleton: This call will also include statements regarding certain non-GAAP financial measures. Please refer to the company's earnings release and Regulation G schedule issued today for a reconciliation of each of these non-GAAP financial measures to most comparable GAAP measures. The earnings release and Regulation G Schedule are available on the Investor Relations page on the company's website at FICO.com or on the SEC's website at SEC.gov.
Speaker Change: This call will also include statements regarding certain non-GAAP financial measures.
These 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 most comparable GAAP measure.
Speaker Change: The earnings release and regulation G schedule are available on the Investor Relations page on the Companys web site at FICO Dot com or on the Sec's website at SEC Gov.
Operator: A replay of this webcast will also be available through April 29, 2026.
Speaker Change: Replay of this webcast will also be available through April 29, 2020.
Will Lansing: I will now turn the call over to our CEO, Will Lansing. Thanks, Dave. Thank you, everyone, for joining us for our second quarter earnings call. In the investor relations section of our website, we've posted some financial highlight slides. We'll be referring to them during this earnings announcement. We had another strong quarter, and we are reiterating our fiscal 25 guidance. As shown on page 2 of the second quarter financial highlights, we reported quarter 2 revenues of $499 million, up 15% over last year. We reported $163 million in GAAP net income in the quarter, up 25%. We reported GAAP earnings of $6.59 per share, up 28% from the prior year.
Speaker Change: I'll now turn the call over to our CEO will Lansing.
Will Lansing: Thanks, Dave. Thank you everyone for joining us for our second quarter earnings call.
Will Lansing: In the Investor Relations section of our website, we've posted some financial highlight slides, we'll be referring to them. During this earnings announcement, we had another strong quarter and we are reiterating our fiscal 'twenty five guidance as shown on page two of the second quarter financial highlights we reported quarter two revenues of $499 million.
Will Lansing: Up 15% over last year.
Will Lansing: We reported $163 million in GAAP net income in the quarter up 25%.
Will Lansing: We reported GAAP earnings of $6 59 per share up 28% from the prior year.
Will Lansing: We reported $193 million in non-GAAP net income in the quarter, up 25%, and non-GAAP earnings of $7.81 per share, up 27% from the prior year. As you can see on page 10, we delivered free cash flow of $65 million in our second quarter. Over the last four quarters, we delivered $677 million of free cash flow. which would be an increase of 45% over the trailing 12-month period ending March 31, 2024. We continue to return capital to our shareholders through buybacks by repurchasing 112,000 shares in Q2. In our score segment, As you can see on page 6 of the presentation, our second quarter revenues were $297 million, up 25% versus the prior year.
Will Lansing: We recorded $193 million and non-GAAP net income in the quarter up 25% and non-GAAP earnings of $7 81 per share up 27% from the prior year.
Will Lansing: As you can see on page 10, we delivered free cash flow of $65 million in our second quarter over the last four quarters, we delivered delivered $677 million of free cash flow.
Will Lansing: Which would be an increase of 45% over the trailing 12 month period, ending March 31 2024.
Will Lansing: We continue to return capital to our shareholders through buybacks by repurchasing 112000 shares from quarter two.
Will Lansing: In our scores segment.
Will Lansing: So you can see on page six of the presentation, our second quarter revenues were $297 million up 25% versus the prior year.
Will Lansing: On the B2B side, Q2 revenues were up 31% versus the prior year, primarily driven by mortgage originations revenues. On the B2C side, Q2 revenues were up 6% versus the prior year, primarily driven by revenue from indirect channel partners. Second quarter mortgage origination revenues were up 48% versus the prior year. Mortgage origination revenue accounted for 54% of B2B revenue and 44% of total scores revenue. Auto origination revenues were up 16% while credit card, personal loan, and other originations revenues were flat versus the prior year.
Will Lansing: On the <unk> side quarter, two revenues were up 31% versus the prior year, primarily driven by mortgage originations revenues.
Will Lansing: On the BDC side quarter, two revenues were up 6% versus the prior year, primarily driven by revenue from indirect channel partners.
Will Lansing: Second quarter mortgage origination revenues were up 48% versus the prior year.
Will Lansing: Mortgage origination revenue accounted for 54% of <unk> revenue and 44% of total scores revenue.
Will Lansing: Auto origination revenues were up 16%, while credit card personal loan and other originations revenues were flat versus the prior year.
Will Lansing: FICO continues to build financial inclusion globally. In the quarter, we announced a Kenya-specific FICO score. Through our partnership with TransUnion, the FICO score is part of a credit risk solution which empowers lenders to serve previously underserved consumers in small, micro, and medium sized enterprises. We also continue to raise awareness of financial literacy. One way we do it is by encouraging consumers to manage their financial health by checking their free FICO score at myfico.com slash free. Over the last year, FICO has seen nearly 70% increase in users accessing their free FICO scores via MyFICO. I hope you'll tell all of your friends to get their free FICO score at MyFICO.
Will Lansing: FICO continues to build financial inclusion globally in the quarter, we announced the Kenyan specific FICO score.
Will Lansing: Through our partnership with Trans Union, the FICO score as part of our credit risk solution, which empowers lenders to serve previously underserved consumers in small micro and medium sized enterprises.
Will Lansing: We also continue to raise awareness of financial literacy.
Will Lansing: One way, we do it is by encouraging consumers to manage their financial health by checking their free FICO score and my FICO Dot Com slash free.
Will Lansing: Over the last year FICO has seen nearly 70% increase in users accessing their free FICO scores by FICO.
I Hope you will tell all of your friends to get their free FICO score at FICO.
Will Lansing: Most importantly, we continue to focus on innovation. FICO Score Mortgage Simulator is now available for lender use through Exactus, the largest credit reseller in the mortgage industry. Mortgage professionals can leverage valuable insight from the simulator to help drive smarter decisions that can present more loan options and favorable interest rates for customers. We continue to drive strong adoption of FICO score 10-T for non-GFC loans, and we're seeing strong results from our early adopter program. Lenders who use the Classic FICO Score today can receive FICO Score 10-T for free through this program so they can evaluate the advantages before fully moving to utilizing FICO's newest and most predictive score.
Will Lansing: Most importantly, we continue to focus on innovation.
Will Lansing: FICO score mortgage simulators now available for lender used through exact us the largest credit retailer in the mortgage industry.
Mortgage professionals can leverage valuable insights from the simulator to help drive smarter decisions that can present more loan options and favorable interest rates for customers.
Will Lansing: We continue to drive strong adoption of FICO score 10 key for non GSE loans, and we're seeing strong results from our early adopter program lenders.
Will Lansing: Lenders, who use the classic FICO score today can receive FICO score 10 T for free through this program. So they can evaluate the advantages before fully moving to utilizing FICO newest and most predictive score.
Will Lansing: Lenders in the program have been able to validate the power of FICO Score 10T in real-world mortgage underwriting, loan production, execution, and servicing. Refer to the February 24th post in our FICO newsroom to see a list of recent additions to our growing list of FICO 10T adopters. As of today, we have clients with over $284 billion in annualized mortgage originations and about $1.43 trillion in eligible mortgage portfolio servicing that have signed up for FICO Score 10T.
Will Lansing: Lenders in the program have been able to validate the power of FICO score <unk> in real world mortgage underwriting loan production execution and servicing.
Will Lansing: Refer to the February 24th posted in our FICO newsroom to see a list of recent additions to our growing list of FICO 10 T adopters.
Will Lansing: As of today, we have clients with over 284 billion in annualized mortgage originations and about 143 trillion ineligible mortgage portfolio of servicing that have signed up for FICO score 10 T.
Will Lansing: In our software segment, we deliver $202 million in quarter two revenue. up 2% from the prior year. The revenue increase was driven mainly by growth in license revenue, recognized at a point in time, partially offset by a decline in professional services. We continue to drive growth in ARR and NRR through our land and expand strategy with expand driven by increased customer usage. As shown on page seven, the total ARR was up 3% with platform ARR growing 17% and non-platform ARR declining 3%. Total NRR for the quarter shown on page eight was 102% with platform NRR at 110% and non-platform at 96%.
Will Lansing: And our software segment, we delivered $202 million in quarter two revenue.
Will Lansing: Up 2% from the prior year.
Will Lansing: The revenue increase was driven mainly by growth in license revenue recognized at a point in time, partially offset by a decline in professional services.
Will Lansing: We continue to drive growth in <unk>, and NR to our land and expand strategy with expand driven by increased customer usage as shown on page seven the total IRR was up 3% with platform AAR growing 17% and non platform <unk> declining 3%.
Will Lansing: Total <unk> for the quarter shown on page eight was 102% with platform NR at 110% and non platform at 96%.
Will Lansing: ACV bookings for the quarter were $21.8 million compared to $16.8 million in the prior year. In our software business, we continue to expand our partner channels.
Will Lansing: ACB bookings for the quarter were $21 8 million compared to $16 8 million in the prior year.
Will Lansing: And our software business, we continue to expand our partner channels FICO recently partnered with Fujitsu a top digital servicing company in Japan, together, we will accelerate digital transformation support for Japanese financial institutions, delivering a future a smarter more connected banking and payments.
Will Lansing: FICO recently partnered with Fujitsu, a top digital servicing company in Japan. Together, we will accelerate digital transformation support for Japanese financial institutions, delivering a future of smarter, more connected banking and payment.
Will Lansing: This quarter, we announced a partnership with DAKADU to bring AI-powered precision to the life insurance industry. DAKADU is a Swiss-based technology company that develops solutions for digital health engagement and health risk quantification. By integrating FICO platform with DAKADU's health risk quantification risk engine, we create a solution that enables insurers to target their life insurance products at specific profiles. This allows DAKADU to design highly personalized insurance products for their customers using advanced decision science.
Will Lansing: This quarter, we announced a partnership with <unk> to bring AI powered precision to the life insurance industry <unk>, a Swiss based technology company that develop solutions for digital health engagement and health risk quantification by integrating FICO platform with Docker. These health risk quantification risk engine, we create a solution that enables <unk>.
Will Lansing: Insurers to target their life insurance products specific profiles.
Will Lansing: This allows Dr did to design highly personalized insurance products for their customers using advanced decision science later in the call I'll talk about our upcoming FICO World Conference, but first let me pass it to Steve to provide further financial details.
Steve Weber: Later in the call, I'll talk about our upcoming FICO World Conference, but first, let me pass it to Steve to provide further financial detail. Thanks and good afternoon, everyone. As Will mentioned, we had another good quarter with total revenue of $499 million and increased to 15% over the prior year. Score segment revenues for the quarter were $297 million, up 25% from the prior year. B2B revenues were up 31%, driven primarily by mortgage originations revenues. Our B2C revenues were up 6% versus the prior year, due to increased revenue from our indirect channel partners. Software segment revenues for the quarter were $202 million, up 2% from the prior year.
Steve Weber: Thanks, and good afternoon, everyone as will mentioned, we had another good quarter with total revenue of $499 million, an increase of 15% over the prior year.
Steve Weber: <unk> segment revenues for the quarter were $297 million up 25% from the prior year <unk>.
Steve Weber: <unk> revenues were up 31% driven primarily by mortgage originations revenues.
Steve Weber: <unk> revenues were up 6% versus the prior year due to increased revenue from our indirect channel partners.
Steve Weber: Software segment revenues for the quarter were $202 million up 2% from the prior year.
Steve Weber: On-premises and SaaS software revenue grew 4% year-over-year, while professional services declined 9%. We do expect Q3 professional services revenue to increase from the Q2 level. This quarter, 86% of total company revenues were derived from our Americas region, which is a combination of our North American and Latin America regions. Our EMEA region generated 9% of revenues, and the Asia-Pacific region delivered 5%. Our total software ARR was $715 million, a 3% increase over the prior year. Platform ARR was $235 million, representing 33% of our total Q2-25 ARR, up from 29% of total Q2-24 ARR. Platform ARR grew 17% versus the prior year, while non-platform declined 3% to $480 million this quarter.
Steve Weber: On premises and SaaS, our SaaS software revenue grew 4% year over year, while professional services declined 9%.
Steve Weber: We do expect Q3 professional services revenue to increase from the Q2 level.
Steve Weber: This quarter, 86% of total company revenues were derived from our Americas region, which is a combination of our North American and Latin America regions.
Steve Weber: Our EMEA region generated 9% of revenues in the Asia Pacific region delivered 5%.
Steve Weber: Our total software <unk> was $715 million, a 3% increase over the prior year.
Steve Weber: <unk> was $235 million, representing 33% of our total Q2, 25% IRR up from 29% of total Q2 'twenty for IRR.
Steve Weber: Platform <unk> grew 17% versus the prior year, while non platform declined 3% to $480 million this quarter.
Steve Weber: We did see some CCS usage headwinds, both platform and non-platform, as some customers chose either delay or downsize some of their customer outreach programs due to macro volatility. Our platform land and expand strategy continues to be successful. Our dollar-based net retention rate in the quarter was 102%, platform NRR was 110%, while our non-platform NRR was 96%. Platform NRR was driven by a combination of new use cases and increased usage of existing use cases. Our software ACB bookings for the quarter were $21.8 million compared to $16.8 million in the prior year. We have a healthy pipeline for the back half of this fiscal year.
Steve Weber: We did see some ccs usage headwinds both platform and non platform as some customers chose to either delay or downsize some of their customer outreach programs due to macro volatility.
Steve Weber: Our platform land and land and expand strategy continues to be successful our dollar based net retention rate in the quarter was 102% platform <unk> was 110%, while our non platform MLR was 96%.
Steve Weber: Platform NR was driven by a combination of new use cases and increased usage of existing use cases.
Steve Weber: Our software ACB bookings for the quarter were $21 8 million compared to $16 8 million in the prior year.
Steve Weber: We have a healthy pipeline for the back half of this fiscal year.
Steve Weber: Turning now to our expenses for the quarter, as shown on page five of the Financial Highlight presentation, total operating expenses were $253 million this quarter versus $260 million in the prior quarter, a decrease of 3%. We expect expenses to be moderately higher in the back half of the year, due mainly to our FICO World event and other marketing activities. Our non-GAAP operating margin, as shown in our Reg G schedule, was 58% for the quarter, compared with 53% in the same quarter last year. And this means we delivered nine gap operating margin expansion of 450 basis points year over year.
Steve Weber: Turning now to the core expenses for the quarter as shown on page five of the financial highlights presentation total operating expenses were $253 million this quarter versus $260 million in the prior quarter a decrease of 3% we.
Steve Weber: We expect expenses to be moderately higher in the back half of the year due mainly to our FICO world event and other marketing activities.
Steve Weber: Our non-GAAP operating margin as shown in our Reg G schedule was 58% for the quarter compared with 53% in the same quarter last year.
Steve Weber: This means we delivered non-GAAP operating margin expansion of 450 basis points year over year.
Steve Weber: Gap net income this quarter was $163 million, up 25% from the prior year's quarter. Our non-gap net income was $193 million for the quarter, up 25% from the prior year's quarter. GAAP earnings per share this quarter were $6.59, up 28% from the prior year, and our non-GAAP earnings per share were $7.81, up 27% from the prior year. Effective tax rate for the quarter was 23.7% and the operating tax rate was 24.9%. For the full year, we believe our net effective tax rate will be around 22% and our recurring tax rate will be around 26%. Free cash flow for the quarter was $65 million, a 6% increase from the prior year.
Steve Weber: GAAP net income this quarter was $163 million up 25% from the prior year's quarter. Our non-GAAP net income was $193 million for the quarter up 25% from the prior year's quarter.
Steve Weber: GAAP earnings per share this quarter were $6 59 up 28% from the prior year and our non-GAAP earnings per share were $7 81 up 27% from the prior year.
Steve Weber: The effective tax rate for the quarter was 23, 7% and the operating tax rate was 24, 9%.
Steve Weber: For the full year, we believe our net effective tax rate will be around 22% and our recurring tax rate will be around 26%.
Steve Weber: Free cash flow for the quarter was $65 million or 66% increase from the prior year free cash flow was $677 million over the last four quarters, an increase of 45% over the trailing 12 month period ended March 31 2024.
Steve Weber: Free cash flow was $677 million over the last four quarters, an increase of 45% over the trailing 12-month period ended March 31, 2024. Our accounts receivable balance was up this quarter due to the timing of some large payments that were not received until early April. We anticipate our free cash flow will accelerate in the second half of this fiscal year. At the end of the quarter, we had $192 million in cash and marketable investment. Our total debt, a quarter end, was $2.53 billion, with a weighted average interest rate of 5%. Currently, 51% of our total debt is fixed rate.
Steve Weber: Our accounts receivable balance was up this quarter due to the timing of some large payments that were not received until early April we anticipate our free cash flow will accelerate in the second half of this fiscal year.
Steve Weber: At the end of the quarter, we had $192 million in cash and marketable investments.
Steve Weber: Our total debt at quarter end was $2 five 3 billion with a weighted average interest rate of 5%.
Steve Weber: Currently 51% of our total debt is fixed rate 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.
Steve Weber: 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.
Steve Weber: Turning to return of capital, we bought back 112,000 shares in the second quarter at an average price of $1,849 per share. We continue to view share repurchases as an attractive use of cash.
Steve Weber: Turning to return of capital, we buy back 112000 shares in the second quarter and an average price of $1849 per share.
We continue to view share repurchases as an attractive use of cash.
Will Lansing: And with that, I'll turn it back to Will for closing comments. Thanks, Dave. The macroeconomic environment remains fluid, but our strategy and execution remain consistent. We are well positioned for this fiscal year and remain confident in the fiscal year guidance that we've provided. Our continued innovations drive significant value to our customers. This quarter, we announced several examples. IA Financial Group leverages FICO platform for expanding insurance underwriting. Nationwide's adoption has led to increased speed in credit decisioning and rollout of new strategies. Floyd's Bank has increased credit card approvals and new-to-bank consumer loan approvals. Next week, we're hosting FICO World in Hollywood, Florida, where many of our customers will highlight their own success stories from adopting FICO offering.
Will Lansing: And with that I'll turn it back to will for closing comments, thanks, Steve <unk>.
Steve Weber: The macroeconomic environment remains fluid.
Will Lansing: Our strategy and execution remain consistent we.
Will Lansing: Our well positioned for this fiscal year and remain confident in our fiscal year guidance that we've provided.
Will Lansing: Our continued innovations drive significant value to our customers this quarter, we announced several examples.
Will Lansing: <unk> financial group Leverages FICO platform for expanding insurance underwriting.
Will Lansing: <unk> adoption has led to increased speed and credit decisioning and rollout of new strategies.
Will Lansing: Deutsche Bank has increased credit card approvals and new to bank consumer loan approvals.
Will Lansing: Next week, we are hosting FICO world in Hollywood, Florida, where many of our customers will highlight their own success stories from adopting FICO offerings.
Will Lansing: Four-day event brings together customers and prospective customers from around the globe to discuss the benefits of making real-time decisions at scale through the power of FICO Platform. Customers will explain the benefits of optimizing interactions with consumers using FICO Platform. Those customers are realizing improved profits, increased customer acquisition and retention, reduced costs, Growth in New Product Offerings and Improved Employee Efficiency. The event will showcase FICO platform demonstrations and have exciting announcements related to bringing innovation to the market. 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 our customers' excitement around this innovative technology.
Will Lansing: Four day event brings together customers and prospective customers from around the globe to discuss the benefits of making real time decisions at scale through the power of FICO platform customers.
Speaker Change: <unk> will explain the benefits of optimizing interactions with consumers using FICO platform.
Speaker Change: Those customers are realizing improved profits increased customer acquisition and retention reduced costs growth and new product offerings and improve employee efficiency.
Speaker Change: The event will showcase FICO platform demonstrations and have exciting announcements related to bringing innovation to the market.
Speaker Change: 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 our customers' excitement around this innovative technology with that I'll turn it back to Dave to open up the questions.
Dave Singleton: With that, I'll turn it back to Dave to open up the questions. Thanks, Will.
Dave Singleton: This concludes our prepared remarks, and we're now ready to take questions.
Speaker Change: Thanks will this concludes our prepared remarks, and we're now ready to take your questions. Operator, Please open the lines.
Operator: Operator, please open the line.
Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered and you are still with yourself from the queue, please press star 1-1 again. We will pause for a moment while we compile our Q&A room.
Speaker Change: Thank you ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered you were seeing with yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.
Manav Patnaik: Our first question comes from Manav Patnaik with Barclays, your line is open. Thank you. Well, typically, you know, this is your kind of beat and raise type order. So I just wanted some perspective on how you thought results came in versus your expectations. And, you know, it sounds like everyone else is just holding the guide, given the potential uncertainty. Is that is that what you're thinking along those lines as well? Yeah, I think that's exactly it. I think we're in an environment with a little more uncertainty than expected. And as usual, we remain conservative, though, there's ample time to raise guidance when we're more confident about it.
Speaker Change: Our first question comes from Manav Patnaik with Barclays. Your line is open.
Thank you.
Well typically this is your tenant beat and raise type.
Speaker Change: So I just wanted some perspective on how you Todd results came in versus your expectations and it sounds like everyone else's is holding the guide given the potential uncertainty is that is that what youre thinking along those lines as well.
Speaker Change: Yes, I think thats exactly it I think we're in an environment with a little more uncertainty than expected.
Speaker Change: And as usual we remain conservative, though there is ample time to raise guidance when we're more confident about it and we're comfortable with where we are.
Will Lansing: And we're comfortable with where we are.
Will Lansing: And then, somewhat of a follow-up, I guess on the software side, I mean, you guys were pretty confident in the re-acceleration of software, so I was just hoping you'd give us some context on, you know, platform, and then even non-platform was down this quarter, so just curious what's happening there. Yeah, I think I'd put that in the same category of macroeconomic factor. What we see on the non-platform side is a little lower, I should say, not lower usage, but lower growth in usage of CCS. And I think that reflects our customers' conservatism around the macro environment.
Speaker Change: And then some.
Speaker Change: As a follow up I guess on the software side. I mean, you guys are pretty confident in the Reacceleration of software. So I was just hoping you could give us some context on platform and then in the non Blackstone was down this quarter. So just curious what's happening there.
Speaker Change: Yes, I think I would put that in the same category of macroeconomic factor.
Speaker Change: What we see.
Speaker Change: Now on the platform side is.
Speaker Change: A little lower.
Speaker Change: I would say if not lower usage, but lower growth in usage of Ccs and I think that reflects our customers' conservatism around the macro environment.
Will Lansing: And I remain confident that our growth rate on the platform side will be strong, will continue to be strong, will strengthen from where it is today. As you know, we don't work quarter to quarter, deals slip, we're okay with that. Our customers and our salespeople know that we don't go to extraordinary lengths to try to close deals by quarter end. And so I think there's all those factors at play. But I think the business is still quite healthy and we feel good about it. Okay, thank you.
Speaker Change: And.
Speaker Change: I remain confident that our growth rate on the platform side will be strong will continue to be strong will strengthen from where it is today.
Speaker Change: As you know, we don't we don't work quarter to quarter deals slip we're okay with that.
Speaker Change: We our customers and our salespeople know that we don't go to extraordinary lengths to try to close deals by quarter end.
Speaker Change: And so I think there is all of those factors at play.
Speaker Change: I think the business is still quite healthy and we feel good about it.
Speaker Change: Okay. Thank you.
Speaker Change: One moment for our next question.
George Tong: Our next question comes from George Tong with Goldman Sachs, your line is open. Hi, thanks, good afternoon. I wanted to see if you can talk a little bit about whether you've seen any changes in credit origination volumes through April, given all the macro uncertainty out there, and if current trends persist, if you can point to where in your guidance range you would expect You know, we haven't seen a lot of change there, but remember, we're a lagging indicator. And in terms of the guidance, I mean, we're comfortable with where we are in the guidance. I mean, one of the reasons we probably didn't change our guidance this quarter is that there's a lot of uncertainty, right?
Speaker Change: Our next question comes from George Tong with Goldman Sachs. Your line is open.
George Tong: Hi, Thanks, good afternoon.
George Tong: I wanted to see if you can talk a little bit about whether you've seen any changes in credit origination volumes through April given all the macro uncertainty out there.
George Tong: If current trends persist.
George Tong: We can point to where in your guidance range, you would expect to land.
George Tong: We haven't seen a lot of change there, but remember we're a lagging indicator.
George Tong: And in terms of the guidance I mean, we're comfortable with where we are in the guidance I mean, one of the reasons, we probably didn't change our guidance. This quarter is that theres a lot of uncertainty around this should go a lot of different directions.
Will Lansing: This could go a lot of different directions. We're confident in our guidance number, but it's difficult to know, you know, with as much volatility as there is, even what we would change it to if we were to change it. So we're sticking with what we have. Okay, got it. That's helpful.
George Tong: We're confident in our guidance number, but it's difficult to know.
George Tong: With as much volatility as there is even what we would change it to if we were to change. It. So we're sticking with what we have.
Speaker Change: Okay got it that's helpful and then following up on.
Will Lansing: And then following up on the platform software business, AR growth decelerated, you mentioned that was due to macro factors. Can you talk about how much visibility you have into reacceleration in platform growth? And will it take macro conditions improving to drive the growth to reaccelerate? Or do you have internal idiosyncratic drivers that can get that growth higher? We have some level of visibility because we obviously book the deals ahead of when the revenue is recognized. So I would say we do have some visibility, and that's part of my optimism about the business. But I think it is tempered by the macro environment.
Speaker Change: The platform software business growth decelerated as you mentioned that was due to macro factors.
Speaker Change: Can you talk about how much visibility you have into.
Speaker Change: The acceleration in platform growth and will it take macro conditions improving to drive the growth to be accelerate or do you have internal idiosyncratic drivers that can get that growth higher.
Speaker Change: Have some level of visibility because we obviously booked deals ahead of when the revenue is recognized so so I would say, we do have some visibility and thats part of my optimism about the business.
Speaker Change: It is tempered by the macro environment, and so sometimes that means deals take longer to close.
Will Lansing: And so sometimes that means deals take longer to close. We haven't experienced this yet, but you never know, deals might not happen because of the macro environment. So we have the conservatism that goes with that. But in terms of visibility, our visibility says our business is healthy and should re-accelerate. Got it. Thank you.
Speaker Change: We haven't experienced this yet, but you never know deals deals might not happen because of the macro environment. So we have the conservatives Chisholm that goes with that but in terms of visibility our visibility says our business is healthy and should reaccelerate.
Speaker Change: Got it thank you.
Speaker Change: One moment for our next question.
Jeff Mueller: Our next question comes from Jeff Mueller with Baird, your line is open. Yeah, thank you. Steven, Paul, I'll look on for Jeff. Just on that point, are you seeing any changes in the customer approach towards the platform sales cycles? Are you seeing longer cycles, longer decision times? Any changes in sort of the contract terms, anything around that?
Speaker Change: Our next question comes from Jeff Mueller with Baird. Your line is open.
Speaker Change: Yes, Thank you Stephen polygon for Jeff.
Speaker Change: Just on that point are you seeing any changes in the customer approach towards.
Speaker Change: The platform sales cycles. Thanks look Neil are you seeing longer cycle is longer decision times.
Speaker Change: Any changes in sort of the Dod contract terms or anything around that.
Will Lansing: Not so far. So I would say that, you know, we've talked about this in the past, that the platform is increasingly a strategic purchase by our customers. And it's part of a bigger strategic plan to be more consumer focused, and to optimize all kinds of interaction with the consumer. So I wouldn't say we're immune from macro conditions. But I do think that we're, you know, we're such a critical part of the strategy for our customers, that it just it's not really going to the back burner, it's not getting canceled, just because conditions are not perfect.
Speaker Change: Not so far so I would say that we've talked about this in the past.
Speaker Change: The platform is increasingly a strategic purchased by our customers and it's part of a bigger strategic plan to be more consumer focused and to optimize all kinds of interaction with the consumer so I wouldn't say, we're immune from macro conditions, but I do think that we are.
Speaker Change: We're such a critical part of the strategy for our customers.
Speaker Change: It's not really going to the back burner or it's not getting canceled just because conditions are not perfect.
Will Lansing: That said, you know, that's today, and who knows how that affects us in the future. But today, we're not seeing it.
Speaker Change: That said today and how that affects us in the future, but but today, we're not seeing that.
Will Lansing: The deal cycles have not really slowed, no. Okay, and then on some of the insurance partners that are customers that you've announced, if you just have to go to market for some of the non financial services, customers is that direct? Is that through partners kind of maybe what's driving, maybe some of the traction in some of the non financial services segments? It's both, it's both. But we, you know, as you know, we have been putting increasing emphasis on our indirect channel. And so, you know, there is more activity there and we are getting more deals outside of our direct sales force.
Speaker Change: The deal cycles have not really slow now.
Speaker Change: Okay and then on.
Speaker Change: So the insurance.
Speaker Change: Partners that are customers actually have announced if you could just talk to the go to market for some of the non financial services.
Speaker Change: Customers is that direct does that through.
Speaker Change: Parker's kind of maybe what's driving maybe some of the traction in some of the non financial services segments.
Speaker Change: Both it's both but as you know we have been putting increasing emphasis on our indirect channel and so there is more activity there and we are getting more deals outside of our direct sales force.
Speaker Change: Alright, thank you.
Operator: One moment for our next.
Speaker Change: One moment for our next question.
Simon Clinch: The next question comes from Simon Clinch with the Redbird Atlantic. Your line is open. Hi, thanks for taking my question. I was wondering if we could just go back to your comments that nothing's really changed in terms of client behavior or volumes through April. But I was wondering if we could perhaps break it down. Was that an overall comment around the aggregate level of volumes or is there any sort of detail at the sort of vertical level which you can share with us?
Speaker Change: The next question.
Simon: Comes from Simon <unk> with Redburn Atlantic Your line is open.
Speaker Change: Hi, Thanks for taking my question I was wondering if you can just go back to your comments that Youre nothing has really changed in terms of client behavior or volumes through April but I was wondering if you could perhaps break it down.
Simon: Was that an overall comment around this.
Speaker Change: The aggregate level volumes or is there any sort of detail at the sort of.
Simon: Vertical level, which would you can share with us.
Will Lansing: You're talking about the scores business? Yes, sorry, in scores. So I mean, honestly, we don't we don't have real time data, frankly. I mean, you'd be better off getting information from the bureaus on that. They can track it down a day to day basis. We, as Will said, we get our reporting in our rears. So we have some anecdotal information. But, you know, we don't have the type of real data to stay with us. OK.
Simon: You're talking about the scores business, yes, sorry, and scope. So I mean honestly, we don't we don't have real time data frankly, I mean, you'd be better off getting information from the bureaus and that they can track down a day to day basis.
Simon: As will said, we get our reporting in arrears. So we have some anecdotal information, but we don't have the type of yield data David here.
Speaker Change: Okay understood. Thanks.
Will Lansing: And then just secondary going back to the software business. And I mean, the booking strength was, was notable this quarter, that sort of maintained despite everything that's going on. I just wanted to give us a little context around pipeline bills. And that sort of touching on the demand side, as opposed to just the deal flipping. The demand side is strong, the pipeline is strong. The current bookings, as you can see, are strong. So, you know, it's all it's all in a good direction. Yeah, I mean, again, where we saw the headwinds, we're on, you know, CCS, and it's just about how, you know, how a lot of our existing customers are reaching out to their consumers.
And then just secondarily going back to the software business.
Speaker Change: I mean, the bookings strength was.
Speaker Change: Notable this quarter that sort of maintained despite this is Daryl and I just wonder if you could give us a little context around pipeline builds.
Speaker Change: And that sort of touching on the demand side as opposed to just the deal slippage.
The demand side strong the pipeline is strong.
Speaker Change: The current bookings as you can see our strong so.
Speaker Change: It's all it's all in a good direction.
Speaker Change: Yes, I mean, we're again, where we saw the headwinds were on Ccs and it's just about how.
Speaker Change: A lot of our existing customers are reaching out to their consumers and if there are accounts growth slows down then you're going to see slowdown in Ccs volume. So a lot of this is it.
Will Lansing: And, and if their accounts growth slows down, then you're gonna see slow down in CCS volume. So, you know, a lot of this is, it has nothing to do with the product necessarily, it's just about how they interact with their consumers.
Speaker Change: Nothing to do with the product necessarily it's just about how they interact with their consumers.
Operator: Understood. Thank you.
Speaker Change: Understood. Thank you.
Speaker Change: One moment for our next question.
Jason Haas: Our next question comes from Jason Haas with Wells Fargo, your line is open. Hey, good afternoon. Thanks for taking my question. I'm curious if you could give us any sense for what sort of price increase you took in auto? Just so we can get a sense for maybe in the quarter, how much was volume versus price driven since there was an acceleration there? We don't comment on price increases until we make them. Well, you're talking about the ones that are already made. Is it the ones that we have this quarter? So there's definitely an impact from the pricing that we've done so far.
Operator: Our next question comes from Jason Haas with Wells Fargo. Your line is open.
Jason Haas: Hey, good afternoon. Thanks for taking my question I'm curious if you could give us any sense for what sort of price increase you took in auto.
Jason Haas: Just so we can get a sense for maybe in the quarter, how much was volume versus price driving since theres that deceleration there.
Jason Haas: We don't comment on price increases until we make them.
Jason Haas: Although several of the ones that are already made into the ones that we have this quarter. So there's definitely an impact from the pricing that we've done so far.
Will Lansing: Oh, I see. Yeah. Of course, yeah. I mean, as the price increase feathers in, as it becomes recognized over the course of the year, price becomes a bigger component, change in price becomes a bigger component of our revenue increase. And so, yeah, that is happening as we speak. But we don't specifically call out the percentage of price increase versus volume increase. Got it. Okay, that's fair.
Jason Haas: Yes.
Jason Haas: As a pricing fees feathers in as it becomes recognized over the course of the year.
Jason Haas: Price becomes a bigger component change in price becomes a bigger component of our revenue increase and so yes that is happening as we speak but we don't we don't specifically call out the percentage of price increase versus volume increase.
Speaker Change: Got it Okay. That's fair and then as a follow up it looks like the growth in personnel expenses, maybe moderate a little bit I wasn't sure if that was just timing.
Steve Weber: And then as a follow up, it looks like the growth in personnel expense has maybe moderated a little bit. I wasn't sure if that was just timing, or you're finding some some efficiencies there. Thanks. Yeah, that doesn't even have anything to do with headcount. In essence, there was some of it's around fringe, some of it's around some of our truing up our supplementary retirement plan. So it has nothing to do with headcount per se. It has more to do with some of the fringe costs around that. So we got we got a benefit this quarter that we probably won't have next quarter out of a few million dollars.
Jason Haas: Or you are finding some efficiencies there thanks.
Jason Haas: Yes that doesn't mean, even having to add head count and in essence there was.
Jason Haas: Some of it's around three and some of it's around some of them are truing up our supplemental retirement plan. So it has nothing to do with head count per se. It has more to do with some of the fringe costs around that.
Jason Haas: So we got a we got a benefit this quarter that we probably won't have next quarter out of a few million dollars.
Steve Weber: Got it. Thank you.
Jason Haas: Got it thank you.
Speaker Change: One moment for our next question.
Faiza Alwy: Our next question comes from Faiza Alwy with Deutsche Bank, your line is open. Yes, hi, thank you. I wanted to ask about the scores business. It looks like there was pretty substantial increase in the non-origination B2B scores revenue. And I'm curious if there was, you know, something specific that you can point to there. There's just a lot of, I mean nothing really. Anything in particular, there's a lot of things that were, you know, kind of, some of it's in some licensed sales and some, you know, in international markets, some of it's a little bit more of a pre-screen.
Speaker Change: Our next question comes from Faiza <unk> with Deutsche Bank. Your line is open.
Speaker Change: Yes. Thank you I wanted to ask about the scores business. It looks like there was a pretty substantial increase in the non origination.
Speaker Change: B to B score is the revenue and I'm curious if there was.
Speaker Change: Something specific that you can point to there.
Speaker Change: Theres just a lot of I mean, nothing really.
Speaker Change: Anything in particular, there is a lot of things that were kind of.
Speaker Change: Some of it's in some license sales in some international markets. Some of it is a little bit more of a pre screen. There's just a lot of things nothing specific to call out, but theres still a lot of things that kind of added to the non originations this quarter.
Will Lansing: There's just a lot of things, nothing specific to call off, but there's just a lot of things that kind of added to the non-originations this quarter. Okay, understood.
Speaker Change: Okay understood and then will I wanted to do have some of those.
Will Lansing: And then, Will, I wanted to ask you about... I was just going to say, we do have a lot of, quarter to quarter, we do have some, you know, fluctuation in that number, so there will always be some quarters that are a little bit higher than others.
Speaker Change: Sorry, I'm, just because we do have a lot of it quarter to quarter. We do have some fluctuation in that number. So there will always be some quarters that are a little bit higher than others.
Speaker Change: Okay. Okay.
Will Lansing: Well, I wanted to ask you about, you know, just the regulatory environment. There's obviously been a lot of shifts post-election and, you know, you've had some of these, you know, new regulators settle into their new roles. So curious how you're thinking about the evolving situation, if you've had any, you know, conversations and anything you can share in terms of your perspective. Well, you know, we're always in conversations with the appropriate regulators and agencies and nothing has really changed. We continue to be in touch with them and talk about our industry and how we ought to go forward with it.
Speaker Change: Wanted to ask you about just the regulatory environment, there's obviously been a lot of chefs closed post election.
Speaker Change: <unk> had some of the new regulator et cetera into their new roles.
Speaker Change: Curious, how you're thinking about the evolving situation if you've had any.
Speaker Change: Conversation.
Speaker Change: You can share in terms of your perspective there.
Speaker Change: Well, we're always in conversations with the appropriate regulators and agencies and nothing has really changed we continue to be in touch with them and talk about our industry and how we ought to go forward with it.
Will Lansing: I would say that the regulatory environment is a good one for FICO. We're pleased with where we are. It's, you know, it's all basically good news for us.
Speaker Change: I would say that the regulatory environment is a good one for FICO.
Speaker Change: Sure.
Pleased with where we are.
Speaker Change: It is.
Speaker Change: It's all basically good news for us.
Operator: All right, thank One moment for our next question.
Speaker Change: Alright, thank you.
Speaker Change: One moment for our next question.
Speaker Change: Okay.
Surinder Thind: Our next question comes from Surinder Thind with Jeffrey's, your line is open. Thank you. Well, maybe could you possibly comment on just kind of the DV and RR number? Obviously, it's slowed down a little bit, but is there a way to disaggregate the client behavior there in the sense that Is it clients have stopped or slowed down kind of the implementation of use cases in the current environment? Or is it more case of they're just running existing use cases maybe less frequently? Yeah, I would say if usage itself, we're not losing customers. And they're not postponing what they do.
Speaker Change: Our next question comes from surrenders than with Jefferies. Your line is open.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: <unk>.
Speaker Change: Well, maybe could you, possibly comment on just kind of the <unk> number.
Speaker Change: Obviously, it slowed down a little bit but is there a way to disaggregate the client behavior there in the sense that.
Speaker Change: Is it clients have stopped or slowed down.
Speaker Change: The implementation of use cases in the current environment or is it more case of they're just running existing use cases may be less frequently.
Speaker Change: Yes, I would say its usage itself, we're not losing customers and theyre not postponing what they do but things that are usage based we're seeing less usage and I really think that's it.
Will Lansing: But things that are usage based, we're seeing less usage. And I really think that's an ebb and flow thing has to do with the environment. Got it. That's helpful. In most cases, it's not like they're really declining. In a lot of cases, it's just not growing as fast as they were in the past. Yes. Please stand corrected there.
Speaker Change: Ebb and flow thing has to do with the environment.
Speaker Change: Got it that's helpful. Answering in most cases, it's not like that really declining a lot of cases, it's just not growing as fast as they were in the past.
Speaker Change: Yes.
Speaker Change: I stand corrected there. It's just the growth rate has slowed down and it was.
Will Lansing: It's just the growth rate has slowed down. this idea of whether clients are just slower to maybe adopt new use cases as they move from one division to the next, to the next as well, right? Versus just... I don't know it's so much that. I think it's more the usage itself. I really think it's a, it's an environmental factor.
Speaker Change: This idea of whether our clients are just slower to maybe adopt new use cases as you move from one division to the next to the next as well right versus just I don't know so much that I think it's more of the usage itself I really think it's environ.
Speaker Change: The environmental factor.
Steve Weber: Got it. And then maybe question for you, Steve, just on the expenses, the SG&A numbers, how do we think about the run rate excluding the expenses that are associated with the FICO World Conference? Yeah, so we will have higher expense in the back half of the year. We do obviously at Fifer World we have, you know, some marketing expenses primarily on the sports side that we that we've got in the back half of the year, that'll add some more expense to it. We're adding headcount as well, but it's not all that dramatic, as we've said, you know, obviously, for several quarters, we are, you know, having headcount where we can bring in good people, but it doesn't, it's not all that material.
Speaker Change: Got it.
Speaker Change: Then.
Speaker Change: Maybe question for you Steve just on the expenses.
Speaker Change: The SG&A numbers, how do we think about the run rate excluding the expenses that are associated with.
Speaker Change: The FICO World Conference.
Speaker Change: Yes, so we will have higher expense in the back half of the year. We do obviously have FICO world we have.
Speaker Change: So marketing expenses, primarily on the score side that we've got in the back half of the year that will add some more expense to it.
Speaker Change: We're adding head count as well, but it's not all that dramatic as we've said obviously for several quarters, we are adding headcount, where we can bring in good people, but it doesn't it's not all that material. So from that point of view youre not going to see a lot of our increase in expenses.
Steve Weber: So from that point of view, you're not going to see a lot of increase in expenses. Got it.
Steve Weber: So excluding FICO World, not a material increase in expenses in the I'm sorry, say that again. So excluding FICO world, not a material increase in expenses, because that's a big one timeline. Yeah, I mean, there's I mean, there's other expenses that we have some marketing expenses, too. So I mean, if you look at, if you look at what's implied in the guide, there is additional expenses that will be in the back half of the year. But you know, obviously, FICO is a big part of that.
Speaker Change: Got it so excluding FICO world not a material increase in expenses in the back half.
Speaker Change: Im sorry say that again.
Speaker Change: Excluding FICO world not a material increase in expenses, because that's a big one time line item right.
Speaker Change: Yes, I mean, there's I mean, there is other expenses that we'll have some marketing expenses too. So I mean, if you look at if you look at what's implied in the guide there is additional expenses that will be in the back half of the year, but obviously <unk> was a big part of that.
Steve Weber: Okay, thank you.
Speaker Change: Got it okay. Thank you.
Speaker Change: One moment for our next question.
Ashish Sabadra: Our next question comes from Ashish Sabadra with RBC, your line is open. Thank you for taking my question. I just wanted to ask a question on software as well. How do we think about the timing of converting some of that ACV? We've seen pretty strong ACV in the first half of 2025, the timing of that converting over to ARR. You know, it's probably, you know, nine months, six to nine months before the conversion takes place. It depends on the individual customer. Some customers, if they're a little more sophisticated or easier to implement, it could be a little bit quicker than that.
Speaker Change: Our next question comes from <unk> <unk> with RBC. Your line is open.
Speaker Change: Thanks for taking my question I just wanted to.
Speaker Change: Ask a question on software is about how do we think about the timing of converting some of that <unk> seen pretty strong excuse me in the first half of 'twenty side, the timing of that converting over to Ian.
Speaker Change: Yes, it's probably.
Speaker Change: Nine months six to nine months before the attack the conversion takes place.
Speaker Change: It depends on the individual customer some customers if they are little more sophisticated they're easier to implement it could be a little bit quicker than that but usually it's in that six to nine month range and then Ashish does take three months to kind of ramp that up. So you can kind of think about more like nine to 12, when it's fully ramped, but these right six to nine months it kind of kicks off.
Will Lansing: But usually it's in that six to nine month range. And then it does take three months to kind of ramp that up.
Will Lansing: So you can I kind of think of it more like nine to 12 when it's fully ramped, but Steve's right, six to nine when it kind of kicks off. That's a very helpful color.
Speaker Change: That's very helpful color and maybe just a quick clarification on the auto origination revenues there was a comment during the Q&A about pricing getting fidelity.
Will Lansing: And maybe just a quick clarification on the auto origination revenues. There was a comment there during the Q&A about pricing getting feathered in. So if our understanding is right, there was only partial benefit of pricing in the quarter and we should continue to see that incremental benefit as we go forward. Is that right? Yeah, I mean, well, you know, auto is the same as everything else. So we repriced it effective January 1. Sometimes it doesn't all roll in right away on January 1. So sometimes it takes a little bit of time for the full benefit of that to hit.
Speaker Change: Our understanding is right. It was only partial benefit of pricing in the quarter.
Speaker Change: We should continue to see that incremental benefit as we go forward.
Speaker Change: Alright. Thanks.
Speaker Change: Yes.
Speaker Change: Sure.
Speaker Change: Auto is the same as everything else that we reprice it effective January one sometimes it doesn't all roll in right away in January 1st So sometimes it takes a little bit of time before the full benefit of that to hit but the auto pricing is the same way as the <unk>.
Will Lansing: But the auto pricing is the same way as the mortgage and auto mortgage and credit card as well. That's pretty helpful color.
Speaker Change: Mortgage and auto mortgage and credit card as well.
Speaker Change: That's very helpful color. Thank you.
Kyle Peterson: One moment for our next question. Our next question comes from Kyle Peterson from Needham, your line is open.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Karl Peterson with Needham Your line is open.
Kyle Peterson: Great, good afternoon. Thanks for taking the questions. I want to start on the buyback and capital allocation. Historically, you guys have been fairly steady and formulatic as to how much you guys have returned to shareholders. Obviously, we seem to be in a more volatile equity market environment.
Speaker Change: Great.
Karl Peterson: Thanks for taking my questions.
Speaker Change: I wanted to start on the buyback and capital allocation historically, you guys have been.
Fairly steady and formulate it goes to how much you guys have returned to shareholders I would just say, where we seem to be in a more volatile.
Will Lansing: How are you guys kind of thinking about balancing returning cash to shareholders versus potentially being like opportunistic and maybe stepping up a little bit more if we do get some short-term blips, you know, any color there on how you guys are thinking about that would be really helpful. Our philosophy there has not really changed. We've said in the past and continues to be true that we're not market timers. We have a big view of the future value of our company, the value today and the future value. And so we're really committed to the stock buyback.
Speaker Change: Equity market environment.
Speaker Change: Just kind of thinking about balancing.
Speaker Change: Returning cash to shareholders potentially being light on.
Speaker Change: Opportunistic and maybe stepping up a little bit more if if we do get some short term blips.
Speaker Change: Color there.
Speaker Change: How you guys are thinking about that would be really helpful.
Speaker Change: Our philosophy, there has not really changed.
Speaker Change: We've said in the past and continues to be true that we're not market timers.
Speaker Change: We have.
Speaker Change: Have a big view of the future value of our company the value today and the future value and so we're really committed to the stock buyback and we don't spend a ton of time thinking about this.
Will Lansing: And we don't spend a ton of time thinking about, you know, is this a great time to back up the truck versus, you know, should we stay out of the market because it feels pricey? We pretty much, you know, buy consistently and we're pretty happy with that. That said, there have been times in our history, as you know, where we felt like the market was punishing us, you know, with a bad understanding of our prospects. And so, you know, although we've historically tried to match our free cash flow to our stock purchases, there have been times when we have exceeded that by quite a bit.
Speaker Change: It's a great time to backup the truck versus.
Speaker Change: Should we stay out of the market because it feels pricey, we pretty much by consistently.
Speaker Change: And we're pretty happy with that that said there have been times in our history as you know where we felt like the market was punishing us.
Speaker Change: With that with a bad.
Speaker Change: Understanding of our prospects.
Speaker Change: So we there.
Speaker Change: Although we have historically tried to match our free cash flow to our stock purchases.
Speaker Change: There have been times, when we have exceeded that by quite a bit and for a one to two year period. We did just a few years ago and thats not out of the question I think I think you'll see us continuing to buy regularly into the future and.
Will Lansing: And, you know, for a one to two year period, we did just a few years ago. And that's not out of the question. I think, you know, you'll see us continuing to buy regularly into the future. And, you know, as opportunities present themselves, we do sometimes heavy up.
Speaker Change: As opportunities present themselves, we do sometimes heavier.
Will Lansing: Okay, that's really helpful. And then maybe a follow up on software.
Speaker Change: Okay.
Speaker Change: That's that's very helpful. And then maybe a follow up on software I know several other guys have asked about this but.
Will Lansing: I know several other guys asked about this, but any color on kind of what you guys are seeing maybe a little more under the hood is some of the sales cycle changes and such. There have been changes in like, whether it's like by geographies or bank size or anything like that. the last like you know call it two months or something or is a lot of the decision-making pretty consistent with what you guys have historically seen and and kind of shared on on recent calls before this No, I don't think we've seen any real, any discernible trends that way.
Speaker Change: Any color on kind of what you guys are seeing maybe a little more under the Hood is similar.
Speaker Change: Some of the sales cycle changes and such urban any changes in like whether it's like by geographies or bank size or anything like that.
Speaker Change: Over the last like call it two months or something.
Speaker Change: Or is a lot of the decision, making pretty consistent with what you guys have <unk> seen in and kind of share. It on on recent calls before this.
Speaker Change: No I don't think we've seen any real.
Speaker Change: Any discernible trends that way and actually if you look at the bookings have been pretty good.
Will Lansing: And actually, you know, if you look at the bookings have been pretty good. So where we've seen some slowdown is in, you know, some of the usage. But you know, we haven't really seen any changes in behavior with the depending on region or geography or, you know, type of, you know, size of bank. Okay, that's really helpful. Thanks guys.
Speaker Change: So where we've seen some slowdown is in.
Speaker Change: Some of the usage.
Speaker Change: We haven't really seen any changes in behavior with the.
Speaker Change: Depending on region or geography or type of size.
Speaker Change: <unk> Bank.
Speaker Change: Okay.
Will Lansing: Nice quarter.
That's very helpful. Thanks, guys nice quarter.
Speaker Change: One moment for our next question.
Joshua Denerling: Our next question comes from Joshua Denerling with V of A Securities. Your line is open. Yeah, hey guys, um, just wanted to touch base on the platform. I know you're for watching.
Speaker Change: Our next question comes from Joshua <unk> with Bofa Securities. Your line is open.
Joshua: Yes, Hey, guys.
Speaker Change: Just wanted to touch base on the platform I know you are continually rolling out new solutions on that sorry could you remind us what your rolling out solution wise. This year on the platform and then just maybe provide some context on how when you've added solutions in the past impacted growth.
Will Lansing: provide some context on how, when you've added solutions in the past. Yeah, we will. So I would say that the largest number of solutions and use cases are related to the credit risk life cycle and things that we've historically done with our legacy applications. So originations, line management, that sort of thing. I would say that our fraud solutions on the platform are still in process. So some of the fraud solutions are available on the platform. Some new ones are available on the platform that you couldn't get before. And some of the old ones are not available yet.
Joshua: Yes.
Joshua: So.
Joshua: <unk>.
Joshua: I would say that the largest number of solutions and use cases.
Joshua: <unk> related to the credit risk lifecycle and things that we've historically done with our legacy applications. So originations line management.
Joshua: That sort of thing.
Joshua: I would say that our fraud solutions on our platform are still in process. So some of the fraud solutions are available on the platform. Some new ones are available on the platform that you couldnt get before and some of the old ones are not available yet so I would say that that's more of a work in progress in terms of where we are I would expect.
Will Lansing: So I would say that's more of a work in progress in terms of where we are. I would expect that virtually all of our fraud solutions will be available on the platform next year.
Joshua: Virtually all of our fraud solutions will be available on the platform next year.
Dave Singleton: And Josh, there will be announcements about innovation on FICO platform at FICO World. Oh, okay. Appreciate that, Dave. Is there, do you guys... Yeah, I think...
Joshua: Okay Josh.
Speaker Change: So there will be announcements and Josh there'll be announcements about innovation on FICO platform at FICO World.
Speaker Change: Okay I appreciate that Dave is there do you guys yes.
Speaker Change: Thank you.
Speaker Change: Oh.
Will Lansing: I would encourage anyone who's interested to, you know, if you're not attending FICO World, check out the FICO World YouTube videos, because we'll go into a lot of detail on what's being released. You guys typically end up getting, like with people who are coming to FICO World, you see like a for a bump from that. for a lot of sales. Oh, yeah, absolutely.
Speaker Change: I would encourage anyone who is interested to if youre not attending FICO world check out the FICO World Youtube videos, because we will go into a lot of detail on what's being released.
Speaker Change: You guys typically end up getting.
Speaker Change: With people, who are coming to FICO World do you see like a.
Speaker Change: Sales growth bump from that.
Speaker Change: Convert to a lot of sales.
Speaker Change: Oh, yes, absolutely I would say that it's our number one.
Will Lansing: I would say that it's our number one sales pipeline building effort. What what happens is, we put a ton of energy into making available all of our top technical personnel, so that customers, prospective customers can really get a deep understanding of what we can do for them. We couple that with meeting other customers who have implemented our solutions. And there's a lot of transfer of knowledge. And frankly, we don't do a lot of selling. It's really being done by our customers explaining to other customers and potential customers what they're doing and where they're having success and where they're not.
Speaker Change: Sales pipeline building effort.
Speaker Change: What happens is we put a ton of energy into making available all of our top technical personnel.
Speaker Change: So that customers prospective customers can really get a deep understanding what we can do for them.
Speaker Change: And we couple that with.
Speaker Change: Meeting other customers, who have implemented our solutions and there's a lot of transfer of knowledge and frankly, we don't do a lot of selling it's really being done by our customers explaining to other customers and potential customers, what theyre doing and where they're having success and where theyre not so it used to be just to show and tell.
Will Lansing: So it used to be just a show and tell. And now I would say that most of the customers who come get a very personalized, customized several days focused specifically on the needs of their bank, the needs of their financial institution, and how we best can serve them. And typically with references and introductions to other customers who've already done what they'd like to do. So it winds up being a huge channel, you know, pipeline building activity.
Speaker Change: And now now I would say that most of the customers who come get a very personalized customized.
Speaker Change: Several days focused specifically on the needs of their bank that needs their financial institution.
Speaker Change: <unk>.
Speaker Change: And how we best can serve them and typically with references in introductions to other customers who've already done what they'd like to do so it winds up being a huge channel.
Speaker Change: Pipeline building activity.
Speaker Change: Thanks for that.
Speaker Change: One moment for our next question.
Scott Wurtzel: Our next question comes from Scott Wurtzel with Wolf Research, your line is open. Hey, good afternoon, guys. Thank you for taking my question. Just one for me, the color on some of the channel partners. software business was helpful. Just wondering how you feel overall about, you know, the partner network in the software business and how that. We continue to believe it's a big opportunity for us. We don't have as much indirect sales as we would like, and we continue to invest in the indirect channel with a view to increasing it. You know, we've talked about this in the past.
Speaker Change: Our next question comes from Scott <unk> with Wolfe Research Your line is open.
Speaker Change: Hey, good afternoon, guys. Thank you for taking my question just one from me the color on some of the channel partners that Youre working within the software business was helpful. I'm. Just wondering how you feel overall about the partner network in the software business and how that's running right now thanks.
Speaker Change: We continue to believe it's a big opportunity for US we don't have as much indirect sales as we would like and we continue to invest in the indirect channel with a view to increasing it.
Speaker Change: <unk> talked about this in the past we have a really dynamite garage salesforce that said, it's quite small if you compare our IP with our distribution strength in direct sales, it's fairly obvious that those are mismatched and although we're taking taking.
Will Lansing: We have a really dynamite direct sales force. That said, it's quite small. You know, if you compare our IP with our distribution strength and direct sales, you know, it's fairly obvious that those are mismatched. And although we're taking a lot of initiative around that, we're adding salespeople, you know, we're growing our direct sales, we recognize that the real opportunity is to expand the indirect sales. And so we have. We've been investing in it. We have a lot of people working on it right now, and for different kinds of things. We have geographic reach that's occurring.
Speaker Change: A lot of initiative around that we're adding salespeople.
Speaker Change: We're growing our direct sales we recognize that the real opportunity is to expand the indirect sales and so we have we've been investing in and we have a lot of people working on it right now and.
Speaker Change: For different kinds of things, we have geographic reach that's occurring we have.
Will Lansing: We have diversification into non-financial services verticals. We have work going with SIs. And interestingly, the work with the SIs is not just the transfer of our professional services work to them, but they're actually taking our IP and building proprietary solutions for themselves that they use with their customers. And so I think it's really nice. It's a partnership where we get the professional services extra capacity, if you want to call it that, coupled with them as a channel, a true channel for moving our IP to market.
Speaker Change: Diversification into non financial services verticals, we have work going with size.
Speaker Change: Interestingly the work with the size is not just the transfer of our professional services work to them, but they are actually taking our IP and building proprietary solutions for themselves that they use with their customers and so I think it is.
Speaker Change: It's really nice.
Speaker Change: Partnership, where we get the professional services.
Speaker Change: Extra capacity, if you want to call it that coupled with them as.
Speaker Change: Channel two channel for moving our IP to market.
Speaker Change: Great. Thanks for the color.
Speaker Change: One moment for our next question.
Kevin McRae: Our next question comes from Kevin McRae with UBS, your line is open. Great, thanks so much. Would you expect some of the slower kind of usage in CCS to kind of capture that in the back half of this year? Or is that something that you think potentially gets pushed out to 2020? Oh, wow. You know, your guess is as good as ours. It's just so hard to say. You know, our business is built around, you know, doing some amount of kind of base level revenue for getting something underway and then built on usage. And we can't really control usage except to the extent that we teach our customers how to get more value out by expanding the usage.
Speaker Change: Our next question comes from Kevin Mcveigh with UBS. Your line is open.
Kevin Mcveigh: Great. Thanks, so much.
Kevin Mcveigh: Would you expect some of the slower kind of <unk>.
Kevin Mcveigh: Ccs.
Kevin Mcveigh: Got it.
Speaker Change: Capture that in the back half of this year or is that something that you think potentially gets pushed out to 'twenty six.
Kevin Mcveigh: While Youre guess is as good as ours.
Speaker Change: Hard to say.
Speaker Change: Our business is built around.
Speaker Change: Doing some amount of kind of base level revenue forgetting something underway and then and then built on usage and we can't really control usage, except to the extent that we teach our customers how to how to get more value out by expanding the usage.
Will Lansing: But, you know, kind of the economic activity level of the usage is something we can't really control. And I don't really have visibility there. I don't know which way it goes.
Speaker Change: But but that kind of the economic.
Speaker Change: <unk> activity level of the usage is something we can't really control and I don't really have visibility there I don't know which way it goes.
Speaker Change: Okay. That's helpful and then with the partner channel and the implementation work is that explaining some of the recent trends in the professional services because it seems like the bookings really scaled.
Will Lansing: And then, with the partner channel on the implementation work, is that help explaining some of the recent trends in the professional services, because it seems like the bookings have really scaled, you know, or is it just the size of the bookings just trying to reconcile the, you know, professional services trends against, obviously, what's been pretty good bookings overall? Yeah, I would say this quarter summit was actually timing. We had some milestones that had to be met in order to reclaim the revenue and it kicked over from March into April. So there's a little bit of a timing there.
Speaker Change: Or is it just.
The size of the bookings just trying to reconcile the professional services trends against.
Speaker Change: Obviously, what's been pretty good bookings overall.
Speaker Change: Yes, I would say this quarter was there any timing we had some milestones that had to be met in order to reclaim the revenue and it kicked over from March into April. So there is a little bit of a timing there you will probably see the maybe even references.
Steve Weber: I will probably see the even references in the prepared remarks that we expect the PS actually the revenue to come up a little bit in the back half and even in our third quarter. Hopeful.
Speaker Change: The prepared remarks that we expect.
Speaker Change: The PFS actually the revenue to come up a little bit in the back half and even in our third quarter.
Speaker Change: Helpful. Thank you very much.
Matthew O'Neill: One moment for our next question. Our next question comes from Matthew O'Neill with FT Partners. Your line is open. Yeah, hi, Jonathan. Thanks for taking my question. Many good questions asked and answered here.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Matthew O'neill with Ft Partners. Your line is open.
Speaker Change: Yes, Hi, gentlemen, thanks for taking my question. Many good questions asked and answered here, So I thought it would.
Will Lansing: So I thought I would ask a more open-ended one just around sort of strategic priorities, but recognize that CycleWorld is next week. So whatever you may be willing to preview as far as kind of the focus for the remainder of the year and beyond would be really interesting. Thank you. Well, I think what you'll see at FICO World is a whole bunch of new capabilities. You'll see you'll see a little bit more on the way we're using AI. On the score side, you'll see some of the innovation that we have coming. We're just gearing up on FICO 11.
Speaker Change: Open after more open ended one just around sort of strategic priorities, but recognize that FICO world is next week. So whatever you may be willing to preview as far as kind of a focus for the remainder of the year and beyond would be really interesting. Thank you.
Speaker Change: Well I think what Youll see at FICO World is.
Speaker Change: A whole bunch of new capabilities, Youll see youll see a little bit more on the way we are using AI.
Speaker Change: On the scores side Youll see some of the innovation that we have coming.
Will Lansing: So you get a little taste of that. So those are the kinds of things that we expect to be announcing next week. Got it. Appreciate it.
Speaker Change: Or just gearing up on FICO 11.
Give a little taste of that.
Speaker Change: Those are the kinds of things that we expect to be announcing next week.
Got it appreciate it thank you.
Operator: Thank And I'm not showing any further questions at this time.
Speaker Change: And im not showing any further questions at this time and as such this does conclude today's presentation. You may now disconnect and have a wonderful day.
Operator: And as such, this does conclude today's presentation.
Operator: You may now disconnect and have a one. Thank you.
Speaker Change: Thank you thank.
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