David Paige

David Paige asked for more details on international performance in the quarter and the outlook for the rest of the year.

Answer

Mark Begor, Chief Executive Officer, highlighted strong performance in Canada post-cloud transformation, robust growth in Latin America (especially Brazil with Boa Vista), and solid contributions from Europe and Asia-Pacific. John Gamble, Chief Financial Officer, added that the UK's recent cloud transformation completion positions it for improved performance in 2026.

David Paige asked for more details on international performance in the quarter and the outlook for the rest of the year.

Answer

CEO Mark Begor highlighted strong performance in Canada post-cloud transformation, very strong growth in Latin America (especially Brazil with Boa Vista), and solid performance in Australia, UK, and Spain. CFO John Gamble added that the UK, having recently completed its cloud transformation, is expected to drive improving performance in 2026.

David Paige inquired about any potential pull-forward of PC demand into the current quarter, referencing a previous estimate of $100 to $200 million, and also asked for an update on the free cash flow expectation for fiscal 2025, specifically whether the $1.1 billion target was still anticipated.

Answer

CEO Patrick Zammit stated that any PC demand pull-forward was very limited, attributing strong PC momentum to the Windows 11 refresh cycle and the early stages of AI PC adoption. CFO Marshall Witt revised the free cash flow expectation for the year to approximately $800 million, down from the previously discussed $1.1 billion for 2025, explaining that higher-than-expected growth rates across the portfolio, particularly in HIVE, increased working capital requirements. He noted that Q4 free cash flow is projected around $850 million, driven by earnings growth and cash conversion improvements, while reiterating a medium-term net income to free cash flow conversion target of 95%.

David Paige asked about any potential pull-forward of PC demand into the current quarter, referencing a previous estimate of $100-$200 million, and also sought an update on the free cash flow expectations for fiscal 2025, which was previously projected at $1.1 billion.

Answer

CEO Patrick Zammit stated that any PC demand pull-forward was very limited, emphasizing continued strong global PC momentum driven by the Windows 11 refresh cycle and the emerging trend of AI PCs. CFO Marshall Witt revised the fiscal 2025 free cash flow expectation to approximately $800 million, attributing the change to higher overall portfolio growth, increased working capital requirements for both distribution and HIVE, and a longer cash conversion cycle for HIVE. He reiterated a medium-term net income to free cash flow conversion target of around 95%.

David Paige of RBC asked about the extent of any PC demand pull-forward observed in the quarter, referencing previous estimates, and sought an update on the free cash flow expectations for fiscal 2025.

Answer

CEO Patrick Zammit stated that any PC pull-forward was very limited, noting continued strong momentum driven by the Windows 11 refresh cycle and the early stages of AI PC demand. CFO Marshall Witt revised the free cash flow expectation for the year to approximately $800 million, down from $1.1 billion, due to higher working capital requirements from stronger-than-expected growth in both distribution and HYVE, while reiterating a medium-term net income to free cash flow conversion of around 95%.

David Paige asked for an assessment of the PC refresh cycle, specifically wanting to know where the company believes the market is in terms of timing, such as the beginning, middle, or end of the cycle.

Answer

CEO Patrick Zammit stated that he believes the PC refresh cycle is in the middle of its course, not at the beginning, as it started one or two quarters ago. He added that this view supports the company's positive outlook on PC contributions to growth in the upcoming quarter.

David Paige of RBC Capital Markets asked if the xVantage platform was a key driver of the recent growth in the SMB market and inquired about the potential for future portfolio rationalization.

Answer

CEO Paul Bay confirmed that the xVantage platform, particularly its AI-powered digital assistant 'AIDA,' is helping to stimulate growth in the SMB segment by shortening sales cycles, especially in North America. He stated that while the company continuously reviews its portfolio, the current focus is on investing in its core platform strategy rather than further major divestitures. EVP & CFO Mike Zilis added that the company remains open to smaller, strategic tuck-in acquisitions.

David Paige, on behalf of RBC Capital Markets, requested an update on the performance and outlook for the international business, Chubb.

Answer

President and CEO Russ Becker expressed strong satisfaction with the international business, highlighting its continued organic growth every quarter since acquisition. He pointed to high single-digit order growth as a key indicator of the health and momentum in its inspection and service business, noting that optimization efforts are ongoing.

David Paige of RBC Capital Markets, on for Ashish Sabadra, asked about commercial business trends and tariff impacts. He also inquired about the company's capital allocation strategy following the debt increase for the Sela acquisition.

Answer

President & CEO Jerry Gahlhoff stated that the commercial business continues to be a strong opportunity, driven by investments in sales and marketing, and highlighted its high customer retention. He noted no significant impact from tariffs. On capital allocation, Gahlhoff emphasized a disciplined and balanced approach, noting the company's healthy leverage ratio of 0.9x provides flexibility to invest in growth while providing shareholder returns.

David Paige, on for Ashish Sabadra, asked about the performance of the Uniform Direct Sales business relative to expectations and its impact on the organic growth guide. He also inquired if any specific vertical, within or outside the focus areas, stood out for its performance.

Answer

CEO Todd Schneider explained that the Uniform Direct Sale business, which was down for the quarter, can be 'lumpy' due to its large-customer focus but remains strategically important for cross-selling. He noted that all four focus verticals are performing well and declined to single one out, emphasizing continued investment across all of them.

Speaking for Ashish Sabadra, David Paige of RBC Capital Markets inquired about the competitive dynamics in the auto and credit card score markets and asked about FICO's capital allocation priorities for 2025.

Answer

CEO William Lansing stated that the competitive landscape in auto and card remains stable and largely unchanged from previous years, with no significant new threats. On capital allocation, he reaffirmed FICO's long-standing strategy of returning capital to shareholders, primarily through share repurchases, noting that despite a high P/E ratio, the company still considers its stock a "screaming value."