Guidance and Revenue Outlook
Q: Why does guidance imply Q4 revenue decline?
A: Management stated they are conservative with guidance and noted that Q4 is seasonally lighter for mortgage volumes, which may lead to a slight volume decline. They emphasized that they have limited visibility into mortgage volumes, which are outside their control. "

Mortgage Revenue Trends
Q: How did mortgage volumes trend this quarter?
A: Mortgage volumes are down versus a year ago but are flat compared to last quarter. Management mentioned that this is not surprising and aligns with expectations, as mortgage volumes are lagging indicators relative to other mortgage data. "

Impact of Potential Rate Cuts
Q: How would rate cuts affect your business?
A: They are already seeing a slight uptick in refinancing and anticipate that as rates come down, volumes will increase. They expect rate cuts could occur towards the end of this year or next year, leading to higher volumes. "

Non-Platform NRR Decline
Q: Why did non-platform NRR slow to 101%?
A: Management is pleased with the 101% net retention rate for their classic offerings and doesn't see it as cannibalization. They aim to manage that business in a flat way, and the growth is focused on the platform side. Prior higher NRR was due to CPI increases and favorable FX impacts last year, which were not expected to maintain. "

Platform ARR Growth
Q: Is 30% platform ARR growth sustainable?
A: They believe the 30% growth rate is sustainable, supported by strong bookings and expanding installed base. While it could change over time, they are confident due to continued customer adoption and increased usage. "

Software Selling Environment
Q: Any changes in software selling environment?
A: The selling environment hasn't changed much over the last year. Customers are making strategic, considered purchases of FICO software, viewing it as more than a point solution, which is the new way of operating. "

Subprime Lending Trends
Q: What trends are you seeing in subprime lending?
A: Subprime markets are seeing banks pull back due to economic uncertainty. Banks are being conservative with new originations, leading to a decline in card and personal loan revenues. They're waiting to see how the economic environment unfolds. "

Software Margins and Expansion
Q: When will software margins expand?
A: Margin contraction was due to a large reimbursement last year and FICO World costs this quarter. They expect margin expansion next quarter as these costs won't recur, leading to lower expenses and improved margins. "

Software Pricing Strategy
Q: What's your software pricing approach?
A: The focus is on making software accessible to encourage adoption. While there's room for value pricing, the strategy is to get software into customers' hands and grow revenue as usage increases. Contracts are designed to allow revenue growth automatically with increased usage without renegotiation. "

FICO Score Pricing Criticism
Q: Has criticism affected your score pricing strategy?
A: Management believes that what they charge for the FICO Score is much less than the value provided. There's no significant change in their thought process; over time, they aim to close the gap between price and value, as FICO Scores are a small part of the overall credit evaluation process. "

Geographic Trends in Software
Q: Any notable regional trends in software?
A: There are no significant regional changes. Strength is seen across all regions, with Asia Pacific previously lagging but now adopting more due to structural changes like AWS availability in India. Quarterly volatility may be due to timing of license revenue. "

Software Bookings and Revenue Timing
Q: When will bookings translate to revenue?
A: The sales cycle can be as long as 400 days, but once deals are signed, implementation doesn't take long. Revenue flow-through is typically seen in the subsequent year after bookings. "

Auto Origination Revenue
Q: Why did auto origination revenue decline?
A: Volumes were relatively flat, but there was a mix shift to peers with lower unit pricing. The price per score decreased slightly due to this mix shift, affecting revenue despite stable volumes. "

FICO 10 T Adoption
Q: Is FICO 10 T adoption driving incremental volume?
A: Adoption is a bit of both upgrades and incremental volume, but it's probably more of the upgrade as customers move from traditional FICO Scores to FICO 10 T ahead of FHFA adoption. "

Software Revenue Growth Moderation
Q: Why did software revenue growth moderate?
A: Growth moderation is due to comparisons with last year's exceptional growth in non-platform offerings. As numbers get bigger, it's harder to maintain high growth rates. They're satisfied with 30% platform growth and aim for stable non-platform performance. "

Software Environment vs. Peers
Q: Are you seeing a slowdown like other software firms?
A: They are not experiencing a weak environment like some peers. Despite industry trends, they haven't felt any slowdown and continue to see strong demand for their offerings. "