Fair Isaac - Earnings Call - Q1 2025

Executive Summary

• Strong start to FY25: revenue $440.0M (+15% y/y), GAAP EPS $6.14 (+28% y/y), non-GAAP EPS $5.79 (+20% y/y), and free cash flow $186.8M (+55% y/y). Management reiterated FY25 guidance for double-digit growth in revenue and earnings.
• Scores segment up 23% y/y; B2B +30% driven by higher mortgage pricing and volume; mortgage origination revenue +110% y/y, now 44% of B2B and 34% of total Scores.
• Software revenue +8% y/y; ARR +6% y/y with platform ARR +20% and total NRR 105% (platform 112%, non-platform 100%); FX headwind of ~$3M to total revenue (~1%) and ~1.5% to Software revenue.
• Strategic catalysts: BNPL scoring study with Affirm to incorporate BNPL data using FICO’s proprietary treatment; early adoption momentum for FICO Score 10T in non-GSE mortgage underwriting and securitization.

What Went Well and What Went Wrong

What Went Well

• Revenue and EPS growth: $440.0M revenue (+15% y/y), GAAP EPS $6.14 (+28% y/y), non-GAAP EPS $5.79 (+20% y/y). “We had another strong quarter and are reiterating our fiscal ’25 guidance.” – CEO Will Lansing.
• Scores momentum: B2B +30% y/y led by mortgage originations (+110% y/y); mortgage revenue mix 44% of B2B and 34% of total Scores.
• Cash generation and capital returns: Free cash flow $186.8M (last 4 quarters $673M, +36%), share repurchases of 79k shares in Q1 and 47k in January.

What Went Wrong

• Platform ARR growth slower than long-term target: Platform ARR +20% y/y vs prior commentary of ~30% target; management cited FX headwinds and temporarily lower usage; expects ARR to accelerate in back half.
• FX headwind: ~$3M drag to total revenue (~1%) and ~1.5% on Software revenue; Brazil particularly impacted ARR.
• Mixed origination trends outside mortgage: Auto +5% y/y, but credit card/personal loan/other originations down ~3% y/y; B2C growth only +3% y/y and requires continued investment.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the first quarter 2025 FICO Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, David Singleton. Please go ahead.

Dave Singleton (VP of Investor Relations)

Thanks, Victor. Good afternoon, and thank you for attending FICO's first 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. 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 many 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 risk factors and forward-looking statements portion of such filings.

Copies are available from the SEC, from the FICO website, or from our investor relations team. 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 reconciliation of each of these non-GAAP financial measures to the most comparable GAAP measure. The earnings release and Regulation G schedule are available on the investor relations page of the company website at fico.com or on the SEC's website at sec.gov. A replay of this webcast will be available through February 4, 2026. I will now turn the call over to our CEO, Will Lansing.

Will Lansing (CEO)

Thanks, Dave, and thank you, everyone, for joining us for our first quarter earnings call. In the investor relations section of our website, we've posted some financial highlight slides that we will be referring to during this earnings announcement. We had another strong quarter and are reiterating our fiscal 2025 guidance. As shown on page two of the first quarter financial highlights, we reported quarter one revenues of $440 million, up 15% over last year. We reported $153 million in GAAP net income in the quarter, up 26%, and GAAP earnings of $6.14 per share, up 28% from the prior year. We reported $144 million in non-GAAP net income in the quarter, up 19%, and non-GAAP earnings of $5.79 per share, up 20% from the prior year.

As shown on page 10, we delivered free cash flow of $187 million in our first quarter and $673 million over the last four quarters, an increase of 36% over the prior period. We continue to return capital to our shareholders through buybacks. We repurchased 79,000 shares in quarter one and an additional 47,000 shares in January. In our scores segment, on page six of the presentation, our first quarter revenues were $236 million, up 23% versus the prior year. On the B2B side, quarter one revenues were up 30% versus the prior year, primarily driven by mortgage originations revenues from both pricing and volume increases. On the B2C side, quarter one revenues were up 3% versus the prior year, primarily driven by revenue from indirect channel partners. First quarter mortgage originations revenues were up 110% versus the prior year.

Mortgage origination revenue accounted for 44% of B2B revenue and 34% of total scores revenue. Auto origination revenues were up 5%, while credit card, personal loan, and other originations revenues were down 3% versus the prior year. This week, we issued a press release on the study we conducted with our partner, Affirm. That study concluded that the inclusion of Buy Now, Pay Later loan data can drive a FICO Score increase for some consumers while improving model risk performance for lenders when applying FICO's innovative treatment to that data. The study also helped inform responsible furnishing of Buy Now, Pay Later loans to the credit bureaus. We're currently working with stakeholders to identify the best way to introduce our proprietary treatment of this data to the credit scoring marketplace. We'll be sharing more details soon. We continue to drive strong adoption of FICO Score 10T for non-GSE mortgages.

This quarter, loans utilizing FICO Score 10T began trading on MCT Marketplace, the largest mortgage asset exchange for the U.S. secondary market. In addition, Cardinal Financial formed and traded the first government-issued mortgage-backed security featuring loans powered by FICO Score 10T. I'm proud of these strong achievements and look forward to continued progress in the quarters ahead. We now have clients with over $261 billion in annualized mortgage originations and approximately $1.43 trillion in eligible mortgage portfolio servicing that have signed up for FICO Score 10T, with some firms already adopting FICO Score 10T to make credit decisions for securitization and for delivery to investors. FICO Score 10T for conforming mortgages sold to the GSEs will be rolled out based on the timeline of the FHFA's implementation of enterprise credit score requirements. In January, the FHFA announced it no longer has a specific timeline for the implementation.

In our software segment, we delivered $204 million in quarter one revenue, up 8% from last year. Revenue increase was driven mainly by growth in SaaS software and license revenue, partially offset by the foreign exchange rate impact. 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 6%, with platform ARR growing 20% and non-platform ARR of 1%. Total NRR for the quarter, shown on page eight, was 105%, with platform NRR at 112% and non-platform at 100%. Foreign exchange had a negative impact of 2% on total ARR and 3% on platform ARR. ACV bookings for the quarter were $21.2 million compared to $18.3 million in the prior year. We continue to drive our software business forward.

Our investments are helping progress development of new FICO Platform capabilities, partner channel adoption, FICO marketplace realization, and building scalability to improve our cost structure. We continue to be recognized for our innovation. This quarter, FICO was awarded Best Anti-Fraud Solution at the Credit and Collections Technology Awards. The award was given to the FICO Customer Communication Service Scam Signal Solution, which uniquely uses telephony signals to detect potential scams. Our innovative work using blockchain technology for responsible AI model governance yielded the Tech of the Future Blockchain and Tokenization Award at the Banking Tech Awards and won a Software Category Transformative Product Award at the Big Innovation Awards. Our software business will be on display this year at FICO World event, which will take place in Hollywood, Florida, in May.

At this four-day event, we'll bring together industry professionals from around the world to connect, share best practices, and learn how FICO enables organizations to power customer connections at scale. We'll highlight successful clients and demonstrate the power of FICO Platform, enabling companies to operationalize analytics, become more composable, and make better decisions at scale. I'll now pass it over to Steve to provide further financial details.

Steve Weber (EVP and CFO)

Thanks, Will, and good afternoon, everyone. As Will mentioned, we had another good quarter with total revenue of $440 million and an increase of 15% over the prior year. Scores segment revenues for the quarter were $236 million, up 23% from the prior year. B2B revenues were up 30%, driven primarily by mortgage originations revenues, as Will said, from both pricing and volume increases. Our B2C revenues were up 3% versus the prior year due to increased revenue from our indirect channel partners. Software segment revenues for the quarter were $204 million, up 8% from the prior year, hindered by foreign exchange rate impact. On-premises and SaaS software revenue grew 10% year-over-year, while professional services declined 14%. This quarter, 87% of total company revenues were derived from our Americas region, which is a combination of our North America and Latin America regions.

Our EMEA region generated 8% of revenues, and the Asia-Pacific region delivered 5%. Our total software ARR was $729 million, a 6% increase over the prior year. Platform ARR was $228 million, representing 31% of our total Q1 2025 ARR, and was up 28%, up from 28% of total Q1 2024 ARR. Platform ARR grew 20% versus the prior year, while non-platform grew 1% to $501 million this quarter. As a reminder, foreign exchange had a negative impact of 2% on total ARR and 3% on platform ARR. We continue to focus on FICO Platform growth while retaining our non-platform customers. Over time, we do expect migration of those non-platform customers to Platform products. Our Platform land and expand strategy continues to be successful. Our dollar-based net retention rate in the quarter was 105%. Platform NRR was 112%, while our non-platform NRR was 100%.

Platform NRR was driven by a combination of new use cases and increased usage of existing use cases. Our software ACV bookings for the quarter were $21.2 million compared to $18.3 million in the prior year. Turning now to expenses for the quarter, as shown on page five of the financial highlight presentation, total operating expenses were $260 million this quarter versus $257 million in the prior quarter, an increase of 1.5%. We anticipate our expenses increasing modestly throughout the year, which will again include costs for FICO World in our third quarter. Our non-GAAP operating margin, as shown in our Reg G schedule, was 50% for the quarter, compared with 48% in the same quarter last year. We delivered non-GAAP margin expansion of 209 basis points year-over-year. GAAP net income this quarter was $153 million, up 26% from the prior year.

Our non-GAAP net income was $144 million for the quarter, up 19% from the prior year's quarter. GAAP earnings per share this quarter were $6.14, up 28% from the prior year, and our non-GAAP earnings per share were $5.79, up 20% from the prior year. The effective tax rate for the quarter was negative 1.6%. The operating tax rate was 24.3%. The effective tax rate for the quarter includes $40 million of reduced tax expense from excess tax benefits recognized upon the settlement or exercise of employee stock awards. As a reminder, excess tax benefit does not impact our non-GAAP net income. For the full year, we expect 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 $187 million, up 55% increase from the same quarter last year.

Free cash flow was $673 million over the last four quarters, which was an increase of 36% over the prior period. At the end of the quarter, we had $230 million in cash and marketable investments. Our total debt at quarter end was $2.42 billion, with a weighted average interest rate of 5%. Currently, 53% of our total debt is fixed rate. Our floating rate debt is prepayable at any time, giving us the flexibility to use free cash flow to reduce outstanding floating rate debt balances in future periods. Turning to return of capital, we bought back 79,000 shares in the first quarter at an average price of $2,015 per share. We purchased an additional 47,000 shares in January at an average price of $1,905 per share, and we do continue to view share repurchases as an attractive use of cash.

With that, I'll turn it back to Will for his closing comments.

Will Lansing (CEO)

Thanks, Steve. The macroeconomic environment remains fluid, but our strategy and execution remain consistent. We're well positioned for this fiscal year and remain confident in the guidance we provided last quarter. Our software and scores businesses continue to be best in class. Our software customers are delighted by our ability to help them optimize interactions with their end customers through data-driven, composable solutions that are executed in real time. Fiscal 2025 marks the second year of the FICO Educational Analytics Challenge Program, which was created to encourage students in data science, engineering, and technology. To date, we've partnered with seven colleges and universities. This year, students in this program are getting hands-on experience learning to develop analytics AI models to detect fraud. In our scores business, we expanded our global financial inclusion initiative through our Lenders Leading Inclusion Program.

FICO provides cutting-edge alternative data scores and financial inclusion strategies to lenders so they can responsibly expand access to credit for underserved communities. On the innovation side, we're in talks with resellers and close to launching our FICO Score Mortgage Simulator, which enables mortgage professionals to run credit event scenarios by applying simulated changes in an applicant's credit report data to simulate potential changes to the applicant's FICO score. With that, I'll turn the call back to Dave, and we'll open up the Q&A.

Dave Singleton (VP of Investor Relations)

Thanks, Will. This concludes our prepared remarks. We are now ready to take questions. Operator, please open the line.

Operator (participant)

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by. We're going to purge the Q&A roster. One moment for our first question. Our first question will come from the line of Manav Patnaik from Barclays. Your line is open.

Manav Patnaik (Managing Director and Senior Equity Analyst)

Thank you. Will, I just had a big picture question, and you talked about the FHFA pushing out the directives and the scoring. They've got a new director in there. There's talk of the GSEs privatizing. Just how do you look at these changes? Do you think GSE privatization has any impact to the status of the FICO Score? Any kind of broad color around that would be helpful.

Will Lansing (CEO)

Sure. Well, so the decision by the FHFA to push out to, on a determinate date, the implementation of bi-merge and a two-score system is not really surprising. I think everyone in the industry believes that the industry is not ready to make this move. And so there's really not a lot of surprise there. With respect to the GSEs, I think it's important to recognize that before the GSEs ever entered conservatorship, they had selected the FICO Score and were using the FICO Score in evaluating the paper that they then securitized and passed to investors. And then, obviously, that's continued through the present time. In a world which who knows whether the GSEs will come out of conservatorship or not, but in a world in which potentially they would, we don't really see a lot of change.

I mean, if you go back to the fundamentals, the FICO Score is really the best way for investors to understand the risk in the paper that they're buying. And we don't see that changing, whether the government is more or less involved with the GSEs. And I guess I would further point out that in every other market where the government's not involved, we have a very strong market share because of the efficacy of the score. So that long way of saying, not a lot of change.

Manav Patnaik (Managing Director and Senior Equity Analyst)

Okay. Fair enough. And then, Will, if I can just ask you on the software business, I think you were expecting ARR to be in the 30%, and now we're talking 20%. Was there something in the quarter, timing-wise, bookings, or can you just talk about if 20 now is the new growth rate we should be thinking about?

Will Lansing (CEO)

Yeah. I'm glad you pointed it out. I wouldn't read too much into any particular quarter. This quarter, we got dinged a little bit with foreign exchange, but really, the biggest driver is the fact that it flows through from bookings, and we had some weaker bookings quarters in the past. We haven't revised our view about the kind of long-term growth trajectory for the platform business, which is in the 30s, 30% or so, and so I wouldn't read too much into this quarter's number.

Steve Weber (EVP and CFO)

Yeah, and Manav, we actually do expect the ARR to accelerate in the back half, even in the coming quarters, so we knew this was going to be a lighter quarter because, again, like Will said, the weaker bookings we had the first couple of quarters last year, and then we got hit by the FX, particularly in Brazil. That had a pretty significant impact this quarter.

Manav Patnaik (Managing Director and Senior Equity Analyst)

Okay. Thanks for that, guys.

Operator (participant)

Thank you. One moment for our next question. Our next question will come from the line of Jason Haas from Wells Fargo. Your line is open.

Jason Haas (Director and Senior Equity Research Analyst)

Hey, good afternoon, and thanks for taking my questions. I'm curious if you could talk about how fiscal Q1 came in versus your expectations. The genesis of the question is I'm curious. I know you're holding the guidance, but I'm curious if it's any less conservative now than it was prior to the results of this quarter coming in.

Will Lansing (CEO)

I would say that we're not really surprised. As you know, we provide conservative guidance, and I think that our internal view on interest rates was more conservative than the general market view, and we built our guidance around that. So for us, no change to our guidance and really no surprise in terms of what we're seeing right now.

Steve Weber (EVP and CFO)

Yeah, and I would just add to that, I mean, this pretty much came in according to our plan. There's a lot of seasonality to the scores business, so if you look at it on a year-over-year basis versus the fourth quarter versus our first quarter, it makes a lot of sense. What's farther out in terms of Q3 and Q4 is harder to know what's going to happen with the current rate environment, but we didn't expect a lot of things to happen this quickly, so this pretty much came in line with what we expected.

Jason Haas (Director and Senior Equity Research Analyst)

Got it. That's helpful. Thank you. I know we're pretty early to the start of the calendar year, but I was curious if you could talk to any sense of the elasticity you're seeing as you've put in the new or started to put in the new prices for mortgage scores and also auto scores. Thanks.

Will Lansing (CEO)

I mean, it is very early, but we have socialized the pricing for 2025, and everything's gone just as expected. I mean, no real issues.

Steve Weber (EVP and CFO)

Yeah. We don't see really any elasticity at this point.

Jason Haas (Director and Senior Equity Research Analyst)

That's great to hear. Thank you.

Operator (participant)

One moment for our next question. Our next question will come from the line of Faiza Alwy from Deutsche Bank. Your line is open.

Faiza Alwy (Managing Director and Research Analyst)

Yes. Hi. Thank you. I wanted to follow up on the software question and just your confidence in accelerating platform ARR back to 30%. Give us a bit more color on what's driving that confidence. Do you expect sort of increased usage? Is there new business that you're expecting? And just a bit more color on where you're getting more traction.

Will Lansing (CEO)

Yeah. And so your question suggests the answer. The usage, we obviously don't control. That part of the equation moves around, and it kind of depends on what the customers do. And so this particular quarter, we had lower usage. In terms of predictability and do we have confidence in the rate accelerating back into the 30% range, we do have that confidence, and that's because of a direct flow through from bookings. So we know what the bookings look like that will be driving ARR growth in the future. And so we have a high level of confidence.

Steve Weber (EVP and CFO)

Yeah. I mean, there's a timing piece between when something's booked and when it goes live. So we have advanced we can see when things will go live and at what point then they'll turn into ARR.

So for the last few quarters, we had some pretty strong bookings, and we have a good idea of when those will go live and when the ARR will roll on. So that piece, as Will said, the usage is harder to understand or to forecast, but the deals that we signed, we have a pretty good idea of when they're going to go live and what kind of ARR they will deliver.

Faiza Alwy (Managing Director and Research Analyst)

Understood. Thank you. And then just as a follow-up on the scores business, I think you mentioned higher volume in mortgage. I'm curious if you can give us a bit more color on what you're expecting in terms of volume across the verticals for this year, sort of what's embedded in the guide, just given the fact that we have seen sort of rates go back up between November?

Will Lansing (CEO)

Yeah. So I could ask you the same question about the future. We all have our crystal balls. We don't know what direction interest rates will go. We don't know when they'll come down. We don't know when the buying will come up as a result of them coming down. I can tell you that our guidance was built around a view that rates would not come down much in 2025, and so far, things are playing out roughly the way we expected. If rates come down in the back half of the year, that'll be a tremendous benefit for us, and if they don't, we're prepared for that, and our guidance reflects that.

Faiza Alwy (Managing Director and Research Analyst)

Understood. Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question will come from the line of Surinder Thind from Jefferies. Your line is open.

Surinder Thind (Equity Research Analyst)

Thank you. Following up on the platform ARR question, it looks like it was mostly related to just a slowdown in the NRR at particular clients. So is the messaging here it was predominantly just usage and that things just kind of slowed down, or how should we think about that? What percentage of revenues or is it characterized?

Steve Weber (EVP and CFO)

A lot of it is usage, so I mean, you're absolutely right. A lot of it's usage, but some of it is lower bookings that are now flowing through from platform, yeah, but the NRR piece is usage. We didn't have churn. We didn't have customers leaving. We had some customers that for some of our products, the usage can vary quite a bit quarter-to-quarter, and in some cases, they might have turned some things down at the end of their calendar year to save some money, which happens from time to time. Sometimes there's seasonality around different pieces of some of what their usage is, so that's really what drove that, and we expect a lot of that returns to form, and then we also expect a lot of the new business that we've already sold will come live.

Surinder Thind (Equity Research Analyst)

Got it. So what it sounds like is if usage returns to normal, then there's kind of a double bounce back effect here, right? Because you'll get the bookings.

Steve Weber (EVP and CFO)

Right. Exactly. Exactly. Yeah.

Surinder Thind (Equity Research Analyst)

Okay.

Steve Weber (EVP and CFO)

Exactly.

Fair enough.

Surinder Thind (Equity Research Analyst)

And then in terms of just the FICO 10T and the non-GSE usage adoption, can you talk a little bit more about that and then maybe contrast that with kind of the delay at the FHFA in terms of the timeline being suspended for implementation? Does a bifurcation in the market between classic FICO and 10T have any implications that we should be aware of from securitization or other considerations here as we think about this longer term? Because obviously, it sounds like on one path, there's a certain number of entities that are going down the path of 10T, but then with conforming, we may not be going down that path.

Will Lansing (CEO)

I mean, it's a very interesting question. I think what you have to start with is that the FICO classic score that's been in use for 25 years in the mortgage market is a highly predictive score. It works really, really well, and it has historically provided the investor community with a pretty good sense of what they're buying and the risk associated with it. FICO 10T is a little bit better. Some would say quite a bit better. Some would say a little bit better. I'm not sure it makes that much difference whether it's a little better or a lot better. It's better enough that we have customers who prefer it. I'm not sure that the answers you get from 10T are very different from the classic FICO score.

And so I don't imagine tremendous agita in the investor community about which score is being used to securitize those portfolios. I imagine they will both be used with no real issues.

Surinder Thind (Equity Research Analyst)

Okay. Thank you. That's helpful.

Operator (participant)

One moment for our next question. Our next question will come from the line of Owen Lau from Oppenheimer. Your line is open.

Owen Lau (Executive Director and Senior Analyst)

Thank you for taking my question. So going back to the ACV bookings, it was strong in the first quarter. Could you please talk about the pipeline and outlook of bookings over the next quarter or so? Do you expect this to also accelerate to also drive high ARR going forward?

Steve Weber (EVP and CFO)

Thanks. Yeah. I mean, honestly, we have a strong pipeline, but again, we will have volatility in that bookings number. There are some quarters that will be really good, some quarters won't be as good because we don't have thousands of bookings. We have a fairly small number, and some of them are pretty large, and they can move from quarter-to-quarter. So there's still a lot of interest in these products. We still have a strong pipeline, but it's hard to put hard numbers out there about what we expect in the next couple of quarters.

We think we'll have a good year for bookings, but every year, every quarter, there's some volatility in that. But again, we put up two quarters that we're really happy with, the last two quarters, and that's going to have an impact as we move through the year in terms of ARR.

Owen Lau (Executive Director and Senior Analyst)

Got it. And then on the expense side, could you please add more color on that? I think you mentioned expense will go up from here, and in the third quarter, there will be FICO World. Any more color you can add in terms of, let's say, how much increase from the first quarter run rate from here? Thanks.

Steve Weber (EVP and CFO)

Yeah. It's not all that significant. And if you've put together a model with the guidance we gave you, there's no change to that. But there are some things that are non-recurring.

The FICO World adds probably $5million-$6 million in our third quarter that we won't see yet in our second quarter, so there are things like that that come along from time to time, but we won't have any material step function type expense increases throughout the year.

Owen Lau (Executive Director and Senior Analyst)

Thanks a lot.

Operator (participant)

One moment for our next question. Our next question will come from the line of Kyle Peterson from Needham. Your line is open.

Kyle Peterson (Managing Director and Research Analyst)

Great. Good afternoon, guys. Thanks for taking the questions. I wanted to start off on capital allocation. It does seem like you guys did kind of amp up the buyback in January when the stock started to pull back. So I guess, should we think about you guys having the appetite to continue to do that if the stock continues to be off highs despite the results you guys have put up?

Will Lansing (CEO)

Yeah, well, look, you know our view on this. We think FICO stocks are great value at $1,800 or $1,900 or $2,000, $2,100 as we did in the last quarter, and in the fullness of time, we're sure we'll be vindicated. We're not really market timers. We try to be in the market kind of all the time with regular purchases to use up our cash flow and maintain our leverage at kind of a comfortable level. That said, when the stock dips, we do sometimes size up our purchases, and we have a lot open on the authorization so that we have the ability to do that should we choose to ramp up, so kind of a long way of saying we believe in the stock, we think it's a pretty good value where it is, and yes, we have appetite for more.

Kyle Peterson (Managing Director and Research Analyst)

Got it. That's really helpful. And maybe just a follow-up on the guide. I think kind of looking at from when you guys last reported to now, I guess, obviously, you guys are reiterating the guide. It does look like the mortgage environment seems a little worse, I guess. Could you walk us through? Did you guys just have maybe a more conservative assumption than the market had in November when you guys guided, or are there any other offsets or moving pieces we should be mindful of that helped offset incremental mortgage softness?

Will Lansing (CEO)

I think it's really a combination of two things. One is I think we did have a more conservative view, a less optimistic view of the future of rates several months ago when we put together the guidance than the market. Certainly, at the time we put our guidance out there, people anticipated a lot more rate cuts in 2025 than we're likely to get. So that is part of it. And then I would say on top of that, you have a management team that always wants to hit its numbers. And so we're conservative. We'll do our best estimate, and then we'll haircut it to make sure we come in. And so it's both those things. We had a more conservative view, and then we added conservatism on top of that.

Steve Weber (EVP and CFO)

And I think this is, Kyle, this is pretty consistent, right? I mean, we did the same thing last year. If you look back, I mean, we guided numbers, and people thought people expected in 2024 multiple rate cuts that never happened. So we plan for a situation where we're not going to count on something that hasn't happened yet. So we did the same thing here. So frankly, we're probably so far, I mean, our first quarter mortgage probably did better than what we had in our guidance because we were so conservative. So if you plan that way and you guide that way, it gives you a little bit of upside even when things are not as rosy as what the world thinks they might turn out to be.

Kyle Peterson (Managing Director and Research Analyst)

Okay. That's really helpful color. Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question will come from the line of George Tong from Goldman Sachs. Your line is open.

George Tong (Equity Research Analyst)

Hi. Thanks. Good afternoon. With your card and personal loan revenues, they were down 3% year-over-year in the quarter. Can you talk about some of the trends that drove this decline?

Steve Weber (EVP and CFO)

Yeah. I mean, it's kind of what you see in the industry, right? There's kind of been a little bit of a pullback in consumer lending. We also have the underneath our numbers, you might see some mixed shifts. So some of the users that are paying a little higher unit cost might be harder hit than some of the bigger operators that are paying a lower unit cost. But yeah, 3% is kind of in line with what you're seeing in the industry. I think that typically is a lighter quarter anyway. And I think there's been a conservativeness among the banks in terms of lending. We've seen that in multiple verticals.

George Tong (Equity Research Analyst)

Got it. That's helpful color. And then going back to the software business, you mentioned seeing lower platform usage in the quarter. Can you talk more about some of the key catalysts that can drive higher usage levels?

Steve Weber (EVP and CFO)

Oh, I mean, it depends customer by customer. I mean, what we saw in some cases in this quarter was that the CCS that's on platform, there was just less usage. And that could be a number of different things. I mean, in some cases, like I said, sometimes they might reduce usage over the holidays if they don't think there's as much receptiveness to some of those messages. Or in some cases, they might be pulling back a little bit to save a little bit of money on some things. There's a lot of it depends on the customer, but typically, there is some seasonality to that business.

Will Lansing (CEO)

And George, remember that CCS product has a collection use case and a fraud use case. That varies differently as you go through the year, and different customers have, some of them have collections, some of them have fraud, some of them have both. So those all play factors into how the usage might go back up.

George Tong (Equity Research Analyst)

Got it. Helpful. Thank you.

Operator (participant)

One moment for our next question. Our next question will come from the line of Jeff Meuler from Robert W. Baird. Your line is open.

Jeff Meuler (Senior Research Analyst)

Yeah. Thank you. Good afternoon. Can you just help us kind of understand the typical timeline for mapping ACV bookings into ARR? I get it that there's this usage component, but are the Q1, Q2 of 2024 ACV bookings kind of flowing into ARR now, or just what's the typical timing?

Steve Weber (EVP and CFO)

Yeah. I mean, it varies, but typically, it's at least six months, and it's probably more like nine to 12 months before they're implemented and up and running. So the fact that we had, in the last year—early last year—we had lighter bookings, that means you're going to have less new stuff coming online right now, and then that's the result of the bookings we had last year. So the bookings that we've done in the last couple of quarters, that bodes well for the latter half of this year in terms of more ARR growth. So there's a six- to nine-month lag between the two.

Jeff Meuler (Senior Research Analyst)

Got it. And the ARR FX headwind, I think you said it was three points to platform. Was that year-over-year or sequential? And I know you've been asked this a million different ways, but can you help? Well, if we can get that. But can you also just help us with any sort of quantification of how much of the platform revenue is driven by usage or what it did sequentially? The ARR sequential trend for platform is just a pretty striking change.

Steve Weber (EVP and CFO)

Yeah. Well, it's on a constant currency basis. So if we had not had changes to the FX, we would have had an extra 3% of ARR this quarter versus last year.

Jeff Meuler (Senior Research Analyst)

Okay. Thank you.

Operator (participant)

One moment for our next question. Our next question will come from the line of Ashish Sabadra from RBC. Your line is open.

Ashish Sabadra (Managing Director)

Thanks for taking my question. I have two clarifying questions. First one on the B2B. When we look at the mortgage, auto, and card origination revenue, those improved year-on-year compared to fourth quarter, but the overall B2B revenue moderated. So I was just wondering if you can comment on what caused that softness. Is it prescreening or some other revenue stream there within B2B scores?

Steve Weber (EVP and CFO)

Are you talking about Q3 or Q4-Q1? You're talking about sequentially?

Ashish Sabadra (Managing Director)

Yeah. Or if you look at year-on-year growth. [crosstalk]

That's the season.

Yeah. Sorry.

Steve Weber (EVP and CFO)

I'm not sure what the question is. Can you just maybe restate the question? I'm not sure what you're. Year-on-year was all up.

Ashish Sabadra (Managing Director)

Yeah. So if I look at mortgage origination, those improved from 95% growth to 110%, auto improved, card improved. But if I look at B2B revenue growth, it was up pretty robust year-on-year, but the growth moderated from 38% year-on-year in fourth quarter to 30% in first quarter.

Steve Weber (EVP and CFO)

30%? I got to look for. I'm not sure what number you're talking about. There's a significant piece of the business that's not originations, right? So I mean, and those pieces don't grow anywhere near as fast as some of the origination pieces do.

Ashish Sabadra (Managing Director)

Okay. Okay. That's helpful.

Steve Weber (EVP and CFO)

So the total, yeah, the total B2B was up 30% year-over-year. But a lot of the pieces grew very rapidly, but a lot of things like the prescreen business, the account management business, and some of the international pieces are not growing that rapidly. So those pieces can fluctuate. If we have a one-time license event with a foreign customer, that might drive a few extra percent of growth in that one quarter. But we didn't have anything particular like that this year for this quarter.

Ashish Sabadra (Managing Director)

Okay. That's helpful. Yeah. Just from a modeling perspective, we were trying to better understand if there are any other FX takes to be cognizant of as we look for the rest of the year.

Steve Weber (EVP and CFO)

Now, I mean, there's always some little, not always, but a lot of quarters we have one-time license deals that could be a few million dollars, and some of those could add a couple percent here or there. But those are hard to predict when they're going to happen. So really, the most predictable or most modelable numbers to look at are probably around originations, and those have a bigger impact.

Ashish Sabadra (Managing Director)

That's very helpful, Will. And maybe just a quick one on B2C. It's good to see that inflection in growth there. I was wondering if you could talk about some of the trends that you're seeing on myFICO and how should we think about the growth going forward? Thanks.

Steve Weber (EVP and CFO)

Yeah. I mean, we're seeing, obviously, we had some really, really strong growth, right, during all the refi boom that was happening. And then we had a lot of difficult comps. And now we're seeing that we've kind of cleared those. And there's a lot of, we've done some investing. I think we talked about this on the call last quarter. We're doing some investing on the B2C side. We're doing some different marketing programs. And we think there's a lot of room for growth there. It takes some time to do that. But we're excited about our myFICO business, certainly, and we're investing in that, and we hope to see more growth throughout this year.

Ashish Sabadra (Managing Director)

That's very helpful, Color. Thanks. Thanks, Steve.

Operator (participant)

One moment for our next question. Our next question will come from the line of Alexander Hess from JPMorgan. Your line is open.

Alexander Hess (Equity Research Analyst)

Hi, everybody. This is Alex with JPMorgan. So your guide implies about 15% year-on-year revenue growth, which is about where at a consolidated level you landed in Q1. So stable from that perspective, but you guys flagged that it's conservative and that you guys are confident in the guide. So maybe just thinking outside of mortgage pricing, are there any new revenue streams that you would call out? I know it's another question on the guide, but everybody's trying to sort of square where this confidence comes from?

Steve Weber (EVP and CFO)

Yeah. I mean, I think outside of pricing, there's a lot of, I mean, even in terms of some of the volume assumptions we have, I mean, there were some really rough quarters last year in terms of volumes that should, if not do much better, we think there'll probably be more of a return to normal. So there's a lot of areas we have, without going into detail, where we're pretty confident that we were not going to have any trouble clearing our guides for the rest of the year.

Alexander Hess (Equity Research Analyst)

Got it. Understood. And then just on the FX side, could you dimension what the impact was to revenues specifically on the software and consolidated side?

Steve Weber (EVP and CFO)

Yeah. It was all on the software side, essentially. I mean, it was in a few particular currencies, but I think it was around $4 million.

Will Lansing (CEO)

I'll look for it.

Steve Weber (EVP and CFO)

Yeah. We have to get back to them. I don't have the exact number.

Alexander Hess (Equity Research Analyst)

Understood. Thank you all.

Operator (participant)

Thank you. One moment for our next question. Our next question will come from the line of Simon Clinch from Redburn Atlantic. Your line is open.

Simon Clinch (Managing Director and Research Analyst)

Hi, everyone. Thanks for taking my question. I wanted to just cycle back to the GSEs. There's been some discussion about the potential for the GSEs when they should they go private to start employing sort of some cash flow modeling internally for their own sort of credit scoring capabilities. And I was wondering, one, is that how would that work, first of all? And would FICO still play a part in that kind of scenario if it were to happen?

Will Lansing (CEO)

I don't know how that would work. It's hard for me to imagine these entities going away from the FICO score. I mean, I think you have a—we have a mortgage system in the United States, which is the envy of the world. And the risks are well understood by the investors. The securitization market works like a dream. And so it's just very hard for me to imagine them moving away from the FICO score, which is so effective for supporting the analytics in that market. And frankly, they wouldn't be mutually exclusive, right? They would be complementary.

Yeah.

Steve Weber (EVP and CFO)

Well, and it has been the case. It's always been the case that Fannie and Freddie have their own models. It's not just a score.

Simon Clinch (Managing Director and Research Analyst)

Right. Understood. Okay. That's useful. Thank you. And just a quick follow-up question, just on the mortgage market. I mean, could you give us an indication of the magnitude of volume growth that you did see in the quarter?

Steve Weber (EVP and CFO)

Now, we don't detail out all that, but you can look at reporting that comes from mortgage bankers and other groups to kind of see what those numbers look like.

Simon Clinch (Managing Director and Research Analyst)

Okay. Thanks so much.

Steve Weber (EVP and CFO)

Thank you.

Operator (participant)

One moment for our next question. Our next question will come from the line of Scott Wurtzel from Wolfe Research. Your line is open.

Scott Wurtzel (Senior VP and Equity Research Analyst)

Hey, good afternoon, guys. And thank you for taking my questions. I just wanted to go back to the software business. I mean, it sounds like you're pretty positive on the forward pipeline, but would love if you can kind of dimensionalize sort of how the broader demand environment looks now that we've kind of turned the calendar to 2025, budgets are reset, and just kind of characterize maybe the demand environment and how budgets are looking relative to last year. Thanks.

Steve Weber (EVP and CFO)

We don't see a tremendous amount of change in appetite for our products from a demand side. I think that where years ago, our point solution applications were under more budget pressure and were the kinds of things that sometimes got deferred, I think that the strategic nature of the platform kind of transcends that. And so not that we're not affected by the fiscal environment of our customers, but it is a high-level decision. It is strategic for our customers. And so we have not experienced a lot of slowdown there.

Scott Wurtzel (Senior VP and Equity Research Analyst)

Got it. That's helpful. And then just a quick clarification. Just on the Scores margins, we saw kind of a step down there quarter over quarter, year-over-year, with a notable uptick year-over-year in expenses. Just wondering if you can kind of give a little bit of context around that. Was there anything to do with mix? Anything around there would be helpful.

Steve Weber (EVP and CFO)

No. There's a little bit more spend on the B2C side. So the B2C side has a different cost structure, and we're doing a little bit of investment there and doing some things in terms of marketing.

Scott Wurtzel (Senior VP and Equity Research Analyst)

Great. Thanks, guys.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Matthew O'Neill from FT Partners. Your line is open.

Matthew O'Neill (Director of Research)

Hi. Good afternoon, gentlemen. Thanks so much for taking my question. A lot of good questions asked and answered, particularly around the guide and outlook for the remainder of the year. So I was thinking maybe we could spend a moment or two digging in further on the press release out today on the study done with Affirm and maybe give us a little bit more of a view on the longer-term integration of Buy Now, Pay Later into the FICO modeling and how that may sort of develop and so forth. Thank you.

Will Lansing (CEO)

Buy Now, Pay Later, as you know, is popular and growing. The bureaus don't have consistent treatment in terms of how they use it. Is there caloric value in understanding the consumer repayment behavior on Buy Now, Pay Later? Absolutely. And so we've been working with Affirm with their data and ours to see how we can extract a little more prediction out of incorporating the Buy Now, Pay later data along with other elements of the credit file into the FICO Score. And so in the future, we will be doing that. We're pretty excited about it. Anytime you can bring alternative data or data that hasn't historically resided in the credit file to the decision, you're going to get a better decision. And so for us, this is an opportunity for our customers. It's a great thing. It's early days still.

I don't think that we have maturity around how the data will be handled across the bureaus. And so we're working on that.

Matthew O'Neill (Director of Research)

Got it. Thank you so much. And I guess as a quick follow-up, have any other players in the space volunteered for the invitation in the press release?

Will Lansing (CEO)

We've been working with Affirm for quite a while.

Matthew O'Neill (Director of Research)

Got it. Thanks again.

Operator (participant)

Thank you. I'm not showing any further questions in the queue. I'd like to turn the call over to David for any closing remarks.

Dave Singleton (VP of Investor Relations)

Yeah. Thank you, Victor. I'll just comment on Alex asked a question about FX impact on revenue. So the number was $3 million for total revenue. It's about 1% of total revenue or about 1.5% of software revenue. But overall, thanks everyone for attending the earnings call today. Please stay tuned to fico.com and LinkedIn to keep up to date on the latest news as we kick into our FICO World event. Thank you very much.

Goodbye.

Operator (participant)

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.