The paragraph outlines the details of the Second Quarter 2025 FICO Earnings Conference Call. It introduces Dave Singleton, the VP of Investor Relations, who is joined by CEO Will Lansing and CFO Steve Weber. The press release for financial results compared both the prior year and prior quarter for run rate understanding. The call mentions forward-looking statements subject to risks and uncertainties, with details available in SEC filings. It also discusses non-GAAP financial measures, with reconciliation details in the company's earnings release. The webcast replay will be available until April 29, 2026.

The second quarter earnings call highlighted a strong performance, with CEO Will Lansing noting significant financial growth. The company reported revenues of $499 million, a 15% increase over the previous year, and a GAAP net income of $163 million, up 25%. GAAP earnings were $6.59 per share, a 28% increase, while non-GAAP earnings were $7.81 per share, up 27%. Free cash flow was $65 million for the quarter and $677 million over the past four quarters, representing a 45% increase compared to the previous year. The company continued capital returns to shareholders by repurchasing 112,000 shares. In the Scores segment, revenues grew by 25% to $297 million, driven by a 31% rise in B2B revenues, notably from mortgage originations, which increased by 48%. Mortgage origination revenue was 54% of B2B revenue and 44% of total Scores revenue. Auto origination revenues rose by 16%, while other originations were flat. The company remains focused on enhancing global financial inclusion.

In the reported quarter, FICO introduced a Kenya-specific FICO score through a partnership with TransUnion to help lenders better serve small and medium-sized enterprises. The company has also focused on financial literacy by promoting free FICO score access via myfico.com, resulting in a significant increase in users. FICO has launched a mortgage simulator for lenders through Exactus and is encouraging the use of FICO Score 10 T, especially for non-GSE loans. This new score has shown strong results in mortgage underwriting and loan servicing, with a notable adoption from lenders. FICO's Software segment achieved $202 million in revenue for the quarter, marking a 2% year-over-year increase.

The paragraph discusses a company's revenue growth primarily due to an increase in license revenue, while professional services declined. Their ARR grew by 3%, with platform ARR increasing by 17% but non-platform ARR decreasing by 3%. Total NRR was 102%, with platform NRR at 110% and non-platform at 96%. ACV bookings rose to $21.8 million from the previous year's $16.8 million. The company is expanding its software business through partnerships, such as with Fujitsu in Japan and dacadoo in the life insurance industry. Total revenue for the quarter was $499 million, a 15% increase over the previous year, with a significant rise in scores segment and B2B revenues, especially from mortgage originations.

The paragraph reports a 6% increase in B2C revenues, driven by indirect channel partners, with software segment revenues hitting $202 million, a 2% rise year-over-year. On-premises and SaaS software revenue went up by 4%, but professional services fell by 9%, with an expected rebound in Q3. The Americas generated 86% of total company revenues, with EMEA and Asia Pacific contributing 9% and 5%, respectively. Total software ARR rose to $715 million, and platform ARR grew by 17% to $235 million, now 33% of Q2 '25 ARR. Some customers delayed or downsized programs due to macroeconomic volatility, but the platform’s land-and-expand strategy was successful. Dollar-based net retention was 102%, with platform retention at 110% and non-platform at 96%. Software ACV bookings for the quarter reached $21.8 million, up from $16.8 million the previous year. Operating expenses decreased by 3% to $253 million, with expectations of higher expenses in the upcoming fiscal year due to marketing events.

In the reported quarter, the company achieved a non-GAAP operating margin of 58%, improving by 450 basis points from the prior year. GAAP net income rose 25% to $163 million, while non-GAAP net income also increased 25% to $193 million. GAAP and non-GAAP earnings per share were up 28% and 27%, respectively. The effective tax rate for the quarter was 23.7%, with expectations for the full year's net effective tax rate to be around 22%. Free cash flow for the quarter increased 6% to $65 million, totaling $677 million over the past year, marking a 45% rise. Accounts receivable increased due to late payments, and future free cash flow is expected to accelerate. The company ended the quarter with $192 million in cash and marketable investments against a total debt of $2.53 billion, of which 51% is at a fixed rate. The company repurchased 112,000 shares during the quarter and views share buybacks as an attractive use of cash amid a fluid macroeconomic environment.

The paragraph discusses FICO's optimism for the fiscal year, highlighting their continuous innovations that benefit their customers. Examples include IA Financial Group expanding insurance underwriting and Nationwide improving credit decisioning with FICO's platform. FICO World, a four-day event in Hollywood, Florida, will feature customer success stories, platform demonstrations, and new announcements. These interactions help increase profits, customer acquisition, retention, and employee efficiency. Some event content will be available on FICO's YouTube channel. The paragraph concludes with Dave Singleton opening the floor for a Q&A session, starting with a question from Manav Patnaik of Barclays, who asks about FICO's performance compared to expectations.

In the article paragraph, Will Lansing addresses concerns about uncertainty in the business environment, expressing a conservative outlook while reiterating confidence in future growth. He explains that while there has been slower growth in the usage of CCS (Customer Communication Services) due to macroeconomic factors and customer conservatism, the platform's growth is strong and expected to strengthen. Lansing emphasizes a long-term strategy, unconcerned with short-term deal closures. When George Tong asks about changes in credit origination volumes amidst the macro uncertainty, Lansing responds that there hasn't been a significant change.

In the paragraph, Steve Weber explains that despite the uncertainty and volatility, the company is maintaining its current guidance as they feel confident about it, although acknowledging difficulties in predicting changes. George Tong asks about the deceleration in ARR growth for the platform software business, attributing it to macro factors, and inquires about the visibility on reacceleration. Will Lansing expresses optimism about the business having some visibility due to pre-booked deals but acknowledges that the macro environment could delay or potentially cancel deals. Stephen Pollock, filling in for Jeff Meuler, asks if there are changes in customer approaches to platform sales cycles. Will Lansing responds that they haven't seen any changes so far.

The platform is becoming a strategic investment for customers as part of a broader plan to focus on consumer interaction. While it's not immune to economic conditions, it remains essential for customers' strategies and hasn't been de-prioritized despite imperfect conditions. Currently, deal cycles haven't slowed. Regarding non-financial services customers, the company uses both direct and indirect sales channels, with increasing emphasis on the indirect channel. Although no significant changes in client behavior or volumes through April have been noted, specific tracking, especially for the Scores business, is limited to data received in arrears.

The paragraph is from a conversation involving Simon Clinch, Will Lansing, Steve Weber, and Jason Haas. Simon and Will discuss the strength of the software business, noting strong demand and a solid pipeline, while acknowledging some headwinds in CCS due to shifts in how existing customers interact with consumers. Jason Haas from Wells Fargo asks about the impact of price increases in the auto sector. Will Lansing states that they don't comment on upcoming price increases, but Steve Weber confirms that current price increases have impacted revenue. As these price increases are gradually recognized, they become a larger factor in the revenue growth over the year.

In the paragraph, a conversation takes place during a financial earnings call. Steve Weber explains that the recent moderation in person outlet expenses is not related to headcount but rather to fringe costs and a one-time benefit from truing up their supplemental retirement plan. Faiza Alwy from Deutsche Bank asks about the increase in non-origination B2B Scores revenue, to which Steve Weber responds that the growth is not due to any specific factor but rather a combination of various elements, including license sales and international market activities. Faiza Alwy then shifts the conversation to Will, inquiring about changes in the regulatory environment post-election as new regulators settle into their roles.

The paragraph is a dialogue primarily involving Will Lansing and Surinder Thind, discussing the current regulatory environment and client behavior regarding FICO's services. Will Lansing feels positive about the regulatory environment and maintains ongoing discussions with regulators. In response to Surinder Thind's question about the slowdown in the DBNRR number, Lansing mentions that while they aren't losing customers or postponing their activities, there is a decrease in the usage of services, which he attributes to external environmental factors. Steve Weber clarifies that while growth has slowed, it hasn’t declined significantly. Both emphasize that this change is more related to current usage rather than a slower adoption of new use cases.

In the discussion, Steve Weber, presumably from FICO, addresses expenses related to the company's SG&A, particularly focusing on the impact of the FICO World Conference on these expenses. He notes that expenses will be higher in the latter half of the year due to marketing efforts and additional headcount, but these increases are not expected to be significant when excluding the FICO World event. Further, Ashish Sabadra from RBC inquires about the timing of converting Annual Contract Value (ACV) to Annual Recurring Revenue (ARR). Steve Weber explains that this conversion typically occurs within six to nine months, depending on the customer's sophistication and ease of implementation.

The paragraph is part of a Q&A session involving Dave Singleton, Ashish Sabadra, Steve Weber, and others. It discusses the timeline for ramping up auto origination revenues, suggesting that there was only a partial benefit from pricing changes in the quarter, and that additional benefits should be realized in the future. Steve Weber confirms that auto pricing, similar to mortgage and credit card pricing, was adjusted as of January 1 but may take time to fully implement. The conversation then shifts to Kyle Peterson's question about the company's approach to stock buybacks and capital allocation amidst a volatile equity market. Will Lansing responds that their philosophy has not changed, emphasizing a commitment to stock buybacks based on their long-term view of the company's value, rather than trying to time the market.

The paragraph is from a conversation about a company's approach to market investments and software developments. The company consistently invests without focusing too much on market timing, but occasionally makes larger investments when they feel misunderstood by the market. They plan to continue buying regularly and capitalize on opportunities as they arise. Regarding their software, there have been no significant changes in sales trends by geography or bank size, but there has been some slowdown in usage. Lastly, they discuss continually rolling out new solutions on their platform, although specific details on this year's releases are not provided in the paragraph.

The paragraph discusses the impact of adding new solutions to the credit risk life cycle, with many solutions related to origination and line management already implemented, while fraud solutions are still being developed. The company expects all fraud solutions to be available on their platform by next year. It also highlights FICO World as a significant event for building their sales pipeline, where they showcase innovations, engage with customers, and foster knowledge transfer without heavily focusing on direct selling. The event leads to a sales growth bump as it allows attendees to deeply understand the company's offerings through interactions with technical personnel and other customers.

The paragraph discusses how the company's customers are actively sharing their experiences and success stories with other customers and potential clients, resulting in personalized engagements tailored to specific financial institutions' needs. This customer-driven interaction has become an effective channel-building activity. Additionally, it addresses the company's efforts to expand its partner network in the software business. The company recognizes a mismatch between its intellectual property and direct sales distribution strength and sees a significant opportunity in growing its indirect sales. Investments are being made to expand geographic reach, diversify into non-financial verticals, and work with system integrators (SIs) to enhance their indirect channel efforts.

The paragraph discusses the dynamics of a business partnership where one party is using the other's intellectual property (IP) to build proprietary solutions for their customers, effectively acting as a channel to bring that IP to market. Kevin McVeigh from UBS asks about expected usage trends in CCS and whether lower usage will be compensated later this year or delayed to 2026. Will Lansing responds that it's unpredictable as their business model relies on initial base-level revenue and usage, which is influenced by external economic activities. Kevin also inquires about recent trends in professional services, questioning if the partner channel impacts booking trends. Steve Weber explains that recent trends were influenced by timing issues, leading to an increase in professional services revenue expected in the latter half, especially in the third quarter.

Matthew O'Neill from FT Partners asked about strategic priorities for the rest of the year, noting the upcoming FICO World event. Will Lansing responded that FICO World would showcase new capabilities, including advancements in AI and innovations on the Score side, particularly regarding FICO 11. The presentation concluded with no further questions.

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