tags:

• thesis/growth
• analyst/buyback-capital
• sector/financial-services ...

FICO reported 3rd Quarter earning on June 30th. The company once again reported outstanding results, driven in part by steady progress in Scores, and a larger than expected bump in Software revenues. Aside from the excellent - albeit somewhat predictable - results there were a number of developments in Mortgage that will have interesting implications for the company going forward.
FICO Launches Powerful Next-Generation Originations Solution for Digital-First Account Openings
Scores

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Scores revenues came in at $201.8M for Q3 2023. This was an outstanding 13% growth YoY. It was also a bump of 2% QoQ. B2B Scores posted an impressive 24% growth YoY with B2C showing a predictable decline of 11%. The most… ah stunning… growth vector in B2B was Mortgage at growth 135% vs. Q3 22. As many have been speculating, normalisation in Mortgage originations will be a significant tailwind for the company for quite some time. CY 22 was a year of very precipitous declines in originations due to the stunning rise in interest rates coming out of the Pandemic. FICO enacted price rises in this part of the Scores business which not even the most swashbuckling capitalists amongst us could have envisioned: source: https://www.nationalmortgagenews.com/news/credit-score-prices-to-rise-as-much-as-400-in-2023

The setup is significant going forward - where volumes begin to grow in line with these… ahh “substantial” price hikes, we should see very significant financial performance out of Scores. Mortgage is of course one of the FICO Score’s most important end markets as it enjoys a regulatory monopoly.