The operator welcomes listeners to the Fair Isaac Corporation Quarterly Earnings Call and introduces the speakers, Dave Singleton, Will Lansing, and Steve Weber. The purpose of the call is to discuss the company's financial results and certain statements made may be forward-looking. The call will also include non-GAAP financial measures and a replay will be available. Will Lansing, the CEO, thanks everyone for joining the call.

The Investor Relations section of the company's website has posted slides for their presentation. They had a strong quarter and a record year with increased revenues and earnings. The company delivered strong free cash flow and returned capital to shareholders through buybacks. In the scores segment, revenues were up 12% for the quarter and 10% for the year. B2B revenues were up 21% for the quarter and 18% for the year, while B2C revenues were down 6% for the quarter and 8% for the year due to difficult comparisons.

In the fourth quarter, mortgage origination revenues increased significantly, while auto, credit card, and personal loan origination revenues saw small changes. FICO Score 10 T, the latest credit score from FICO, has been adopted by top 10 retail mortgage lender Movement Mortgage. This new score offers improved predictive power and can help lenders make more competitive credit offers while maintaining the trusted FICO Score criteria. In the software segment, revenues increased by 11% in Q4 and 10% for the fiscal year. The company continues to see growth in ARR and NRR through its land-and-expand strategy, with platform ARR growing by 53% and non-platform ARR growing by 14%. Total NRR for the quarter was 120%, with platform NRR at 145% and non-platform NRR at 111%.

The company has seen strong demand from new customers, resulting in a 10% increase in ACV bookings for the year. Their FICO Platform continues to be in high demand and has been recognized for its innovation and risk management technology. Total revenue for the quarter was $390 million, up 12% from the previous year, with scores revenues and software segment revenues also showing significant growth. The company is optimistic about their momentum heading into fiscal year 2024.

In the fourth quarter, the majority of our revenues came from the Americas region, with strong growth in both platform and non-platform ARR. Our customers are showing increased usage and net expansion, leading to a high dollar-based net retention rate. Our expenses increased by 4% compared to the prior year, and we plan to prioritize investments in our FICO Platform and cybersecurity in the upcoming year.

The company's non-GAAP operating margin was 51% for the quarter and full year, with a 300 basis point expansion for the full fiscal year. GAAP and non-GAAP net income increased, with an effective tax rate of 22% for the full year. Free cash flow was at a record high of $163 million for the quarter and $465 million for the full year. The company has $170 million in cash and marketable investments, with $1.86 billion in total debt. The company bought back 136,000 shares in the fourth quarter and 615,000 shares in fiscal 2023.

The company had $121 million remaining on their current Board authorization at the end of the quarter and plans to continue using cash for share repurchases. The CEO is optimistic about the company's future and highlights their investment in financial literacy and diversity initiatives. The departure of Stephanie Covert, leader of the software business, was also announced. The company expects growth in both their scores and software segments in fiscal 2024, with additional impact from pricing initiatives. They are guiding for double-digit growth in revenue and earnings due to strong bookings, pipeline, recurring revenues, and a diversified product portfolio.

The company is predicting an 11% increase in revenues and a 14% increase in net income for the upcoming year. They are also expecting a decline in origination volumes and will be taking price action in line with CPI. On the expense side, there will be a modest increase, mostly due to reprioritization.

The company is investing in software and security to ensure their platform is secure. They have noticed a decline in credit volumes among sub-prime consumers but are confident in their pricing strategy. Their software ARR growth has accelerated and they have successfully penetrated the market with their platform, with over 100 customers using it and 55 of the top 300 financial services customers on board.

The company expects the expand side of their business to be larger than the land side, with expansion revenue exceeding land revenue. This is due to customers finding new ways to use the platform. The non-platform business has seen accelerated growth, mainly driven by transaction volume. The company continues to invest in features and functionality for their legacy products, which have long-term customer relationships. The increase in non-platform business is sustainable and mostly volume-related. The company also offers special pricing for scores next year.

The speaker confirms that mortgage fees for different tiers of institutions are different and that they have studied and implemented fair price increases. They also mention a shortening of the sales cycle due to various factors and high demand for their offering. The expenses in the fourth quarter were slightly higher than expected and may include some of the new investments, but the investments will be mostly incremental.

The speaker discusses some one-time expenses and the potential for higher expenses related to incentives and software personnel. They also mention that the company's run rate will not increase significantly. In response to a question about pricing, they state that they do not give specific numbers but their guidance is conservative and includes a CPI increase and some additional increases, but the timing of these increases is uncertain. They note that there is more volatility in volumes compared to previous years and that it is difficult to predict future interest rates.

William Lansing discusses the departure of Stephany and the future of the software business. He expresses confidence in the strong team and states that he will take over the leadership of the software business. He also mentions the possibility of another leader in the future but states that he will run it for now. The software business is expected to continue growing at a double-digit rate, with high demand for their platform.

The pipeline for the company this year is stronger than last year, and they are optimistic about the future. The business has evolved and they now have more visibility into revenue from signed deals. They are less reliant on signing deals at the end of the quarter to generate revenue. The EPS guidance assumes a relatively flat share count and interest expense, but they may take advantage of market conditions to pay down debt. The call concludes with closing remarks from the company.

This summary was generated with AI and may contain some inaccuracies.