Show me Q2 2025 earnings call Q&A session for fico

## 1. Detailed Q&A Breakdown

### Interaction 1:

1) Analyst Name and Firm Name: Manav Patnaik, Barclays
– The question: Will, typically, you know, this is your kind of beat and raise type quarter. 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 what you’re thinking along those lines as well?
– The response: 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. So there’s ample time to raise guidance when we’re more confident about it, and we’re comfortable with where we are.

2) The question: And then somewhat of a follow-up, I guess, the software side. I mean, you guys confident in the reacceleration 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.
– The response: I think I 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. I remain confident that our growth rate on the platform side will be strong, 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. So I think there’s all those factors at play. But the business is still quite healthy, and we feel good about it.

### Interaction 2:

1) Analyst Name and Firm Name: George Tong, Goldman Sachs
– The question: Hi, thanks. Good afternoon. 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 to land.
– The response: We haven’t seen a lot of change there, but remember we’re lagging in dictator. 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? This should go a lot of different directions. We’re confident in our guidance number, but it’s difficult to 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.

2) The question: Okay, got it. That’s helpful. And then following up on the platform software business, ARR 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?
– The response: 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. 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, you know, our business is healthy and should reaccelerate.

### Interaction 3:

1) Analyst Name and Firm Name: Stephen Pollock on behalf of Jeff Meuler, Baird
– The question: Just on that point, are you seeing any changes in the customer approach towards the platform sales cycles, things like are you seeing longer cycles, longer decision times? Any changes in sort of the contract terms, anything around that?
– The response: 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 such a critical part of the strategy for our customers that it’s not really going to the back burner, it’s not getting canceled just because conditions are not perfect. That said, that’s today and who knows how that affects us in the future. But today, we’re not seeing it. Deal cycles have not really slowed. No.

2) The question: Okay. And then on some of the insurance partners that are customers that you’ve announced, if you could just talk about the 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 traction in some of the non-financial services segments?
– The response: It’s both. But you know, 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.

### Interaction 4:

1) Analyst Name and Firm Name: Simon Klintch, Redburn Atlantic
– The question: Hi. 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 sort of the aggregate level volumes? Or is there any sort of detail at the sort of vertical level which you can share with us?
– The response: You’re talking about the Scores business? So, I mean, honestly, 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 on a day-to-day basis. As Will said, we get our reporting in arrears. So we have some anecdotal information, but we don’t have the type of real data to stay with us.

2) The question: Okay, understood. Thanks. And then just secondary, going back to the software business. And I mean, the bookings strength was notable this quarter. That’s sort of maintained despite everything that’s going on. I just wondered if you could give us a little context around pipeline builds and that sort of touching on the demand side as opposed to just the deal flipping. Thanks.
– The response: The demand side is strong, the pipeline is strong. The current bookings as you can see are strong. So it’s all in a good direction. Yeah, I mean, again, where we saw the headwinds were on CCS and it’s just about how a lot of our existing customers are reaching out to their consumers. If their accounts growth slows down, then you’re see slowdown in CCS volumes. So a lot of this is it has nothing to do with the products necessarily, it’s just about how they interact with their consumers.

### Interaction 5:

1) Analyst Name and Firm Name: Jason Hoss, Wells Fargo
– The question: 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? Thanks.
– The response: We don’t comment on price increases until we make them. Well, said about the ones that are already made, the ones that we have this quarter. So there’s definitely an impact from the pricing that we’ve done so far. Oh, I see. Yeah, of course. Yeah, as the price increase feathers in, as it becomes recognized over the course of the year, 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.

2) The question: Got it. Okay. That’s fair. 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 efficiencies there. Thanks.
– The response: 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 Supplemental 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 a benefit this quarter that we probably won’t have next quarter of a few million dollars.

### Interaction 6:

1) Analyst Name and Firm Name: Faiza Alwy, Deutsche Bank
– The question: 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 something specific that you can point to there.
– The response: There’s just a lot of nothing really anything in particular. There’s a lot of things that were kind of some of it’s in some license sales and some in the international markets. Some of it’s a little bit more of a pre-screen. There’s just a lot of things, nothing specific to call up, but there’s a lot of things that kind of added to the non-originations this quarter.

2) The question: Okay, understood. Then Will, I wanted to…
– The response: I was just going to say we do have a lot of in 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.

### Additional Questions and Responses:

– Surinder Thind, Jefferies: Asked about the slowed DBNRR and whether it’s due to slowed implementation or less frequent running of use cases. Answered that it’s more on the usage side due to the environment, not necessarily slowing down adoption of new use cases.

– Ashish Sabadhar, RBC: Curious about the timing of converting ACV to ARR and impact of pricing on auto origination revenues. Answered 6–9 months to convert ACV to ARR, with 9–12 months to fully ramp, and yes, the assumption of incremental pricing benefit is correct.

– Kyle Peterson, Needham: Asked about buyback and capital allocation strategy in current equity market conditions and whether FICO will be more opportunistic. Management affirmed a steady approach but may increase buybacks if the stock appears undervalued.

– Joshua Dennerling, BofA Securities: Sought insight into platform rollout and previous impacts on growth. Stated that many credit-related solutions are in place, while fraud solutions are a work in progress and expansion on the platform continues.

– Matthew O’Neil, Feet Partners: Asked about strategic priorities looking forward. Mentioned upcoming focus areas at FICO World, including AI and a preview of FICO eleven.

## 2. Sentiment Score Distribution Table

## 3. Conclusion & Risk Identification

### Sentiment Score Conclusion:
The overall sentiment from the earnings call was mildly positive, with sentiment scores ranging from 6 to 8. Analysts appeared cautiously optimistic, recognizing the strong performance and growth potential while acknowledging macroeconomic uncertainties that may impact future performance.

### Key Positive Takeaways:
– Growth in the mortgage segment and increased usage of innovative solutions like FICO Score 10T.
– Strong platform ARR and optimism for continued growth.
– Strategic focus on expanding channel partners and launching new use cases.
– Continued emphasis on returning capital to shareholders through share buybacks.

### Concerns and Red Flags:
– Macroeconomic uncertainties and customer conservatism impacting growth predictions and decision timelines.
– Slower growth in the non-platform segment due to CCS usage headwinds.
– Potential delayed or subdued software sales growth contingent on economic conditions.
– Fluctuations and uncertainty in customer behavior and the broader economic landscape potentially affecting volumes and revenue projections.

In summary, while FICO demonstrated robust financial performance, there are external economic factors and internal dynamics that warrant cautious monitoring.