Fair Isaac Corporation (NYSE:FICO) Q1 2024 Earnings Call Transcript

Fair Isaac Corporation (NYSE:FICO) Q1 2024 Earnings Call Transcript January 27, 2024

Fair Isaac Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Fair Isaac Corporation Quarterly Earnings Call. During the presentation, all participants will be in a listen-only mode, afterwards we will conduct a question-and-answer session. [Operator Instructions] And as a reminder, this conference is being recorded, Thursday, January 25, 2024. It is now my pleasure to turn the conference over to David Singleton. Please go ahead.

Dave Singleton: Good afternoon, and thank you for joining 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. And 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 the Regulation G schedule issued today for a reconciliation of each of these non-GAAP financial measures to the most comparable GAAP measure. The earnings release and Regulation Schedule G are available on the Investor Relations page of the Company’s website at fico.com or on the SEC’s website at sec.gov. And a replay of this webcast will be available through January 25, 2025. Now I’ll turn the call over to our CEO, Will Lansing.

Will Lansing: Thanks, Dave, and thank you everyone for joining us for our first-quarter earnings call. In the Investor Relations section of our website, we posted some financial highlights slides that we’ll be referencing during our talk today. I am so pleased to report that we had a great start to our fiscal year with double-digit growth in revenue, net income, and EPS versus last year. It was a solid quarter and we’re well-positioned for our fiscal 2024. And as shown on page two of the first quarter financial highlights, we reported first quarter revenues of $382 million, up 11% over last year. We delivered $121 million of GAAP net income in the quarter, up 24% and GAAP earnings of $4.80 per share, up 25% from the prior year.

On a non-GAAP basis, quarter one net income was $121 million, with earnings of $4.81 per share, up 12% and 13% respectively. We delivered free cash flow of $121 million in our first quarter, up 32% versus prior year. We continue to return capital to our shareholders through buybacks. In quarter one, we repurchased 78,000 shares at an average price of $915 per share. This month we exhausted the remainder of the 2022 repurchase authorization and we announced a new $500 million authorization this week. In our scores segment, as you can see from page six, our first quarter revenues were $192 million, up 8% versus the prior year. On the B2B side, the current quarter revenues were up 12% versus the prior year. This is a strong result considering the impact of higher interest rates on loan origination volumes and also the Latin America license renewal that we had in Q1 of 2023.

On the B2C side, the current quarter revenues were down 3% versus the prior year. First quarter mortgage origination revenues were up 188% versus the prior year. Auto originations were down 3%. Credit Card, Personal Loan, and Other Originations revenues were down 5% versus the prior year. We continue to see traction with our latest score FICO Score of 10T. So you’ll recall, last quarter we announced that Movement Mortgage was an early adopter of FICO 10T. This quarter, we announced the CrossCountry Mortgage, which is the nation’s number three retail mortgage lender will use FICO 10T to analyze these non-conforming loans. They are the first lender-originating loans to be issued in a mortgage-backed security based exclusively on the FICO Score of 10T.

These clients in addition to others have signed up to demonstrate to investors and rating agencies and other stakeholders, a real-world example of the improved predictive performance offered by FICO Score 10T. In our Software segment, we delivered $190 million in quarter one revenue, up 14% from last year. We continue to drive strong growth in ARR and NRR through our land and expand strategy, with expand driven by increased customer usage. As you can see on page seven, total ARR was up 18% with platform ARR growth growing 43%, and non-platform ARR growing 11%. Total NRR for the quarter shown on page eight was 114% with platform NRR at 136% and non-platform NRR at 125%. We do continue to see strong demand from our new customers. Our total ACV bookings for the quarter were $18 million, a good result after a particularly strong fourth quarter.

We continue to have a robust pipeline of opportunities, particularly with FICO Platform offerings. We’ve expanded our FICO Platform reach both by geography and by customer type. In December, we launched FICO Platform with an event in India and we’ve already had several early adopters looking to expand to multiple use cases. In the U.K., StepChange Debt Charity, a market leader will use the FICO Platform to provide individual outcomes to consumers seeking to become debt-free. Our biggest opportunity near-term continues to be in North America, where banks are focused on digital transformation and understand the value of FICO Platform, where data-driven analytics allow hyper-personalized decisioning and consumer interactions on a real-time basis.

We continue to innovate and bring new capabilities to the FICO Platform and work with new customers to demonstrate value and with existing customers to expand use cases. Our innovation will be highlighted at this year’s FICO World Event, which will take place in San Diego in April. I’ll add more on that later, but for now, let me turn the call over to Steve for further financial details.

Steve Weber: Thanks, Will, and good afternoon, everyone. As Will mentioned, we had another very good quarter with total revenue of $382 million, an increase of 11% over the prior year or 12% when adjusted for last year’s divestiture. Scores segment revenues for the quarter were $192 million, up 8% from Q1 of 2023. B2B revenues were up 12% driven by mortgage origination revenues. Our growth would have been higher if not for the Latin American license revenue, which we’ll talk about in Q1 of 2023 that did not recur this year. Our B2C revenues were down 3% versus the prior year due to declines in our myFICO business, partially offset by our license B2C business. Scores segment revenues in the first quarter were $190 million, up 14% versus Q1 of 2023, or 17% when adjusted for the divestiture.

This quarter, 83% of total company revenues were derived from our Americas region, which is a combination of our North America and Latin American regions. Our EMEA region generated 10% of revenues and the Asia-Pacific region delivered 7%. Our total software ARR was $688 million, an 18% increase over the prior year. Platform ARR was $190 million, representing 28% of our total Q1 ’24 ARR, up from 23% of total Q1 ’23 ARR. Platform AAR grew 43% versus the prior year, while non-platform ARR grew 11% to $497 million this quarter. Our platform, land and expand strategy continues to be very successful. Our dollar-based net retention rate in the quarter was 114% versus 110% last year. Platform NRR was 136% versus 130% in the prior year. While our non-platform NRR was 108% versus 103% in the prior year.

Non-platform ARR growth was driven by customers increased usage and CPI price increases. Our software ACV bookings for the quarter were $18.3 million versus $21.5 million in the prior year. We view this as a successful sales quarter coming off a record quarter in our fourth quarter of ’23. Remember that ACV bookings include only the annual value of software sales and exclude professional services. Turning now to our expenses for the quarter, total operating expenses were $231 million this quarter versus $205 million in the prior year. Our current quarter expenses are a 3% increase from the prior quarter, which was $224 million. As we indicated last quarter, we maintain our focus on investment to accelerate development and distribution of the FICO Platform.

And as a reminder, our incremental investment is relatively modest and is already built into our guidance. Our non-GAAP operating margin as shown in our Reg G schedule was 48% for the quarter. GAAP net income this quarter was $121 million, up 24% from the prior year’s quarter. Adjusting for excess tax benefit and the prior year Siron divestiture, our year-over-year GAAP net income grew 14%. Our non-GAAP net income was $121 million for the quarter, up 12% from the prior year’s quarter. The effective tax rate for the quarter was 7% and included $24 million of reduced tax expense from excess tax benefits recognized upon the settlement or exercise of employee stock awards. In the prior year, the excess tax benefit was $10 million. We believe that our fiscal year 2024 net effective tax rate will be around 22%, while our recurring tax rate is expected to be around 26%.

Again, the recurring tax rate is before any excess tax benefit and other discrete items. Free cash flow for the quarter was $121 million, a 32% increase on the previous year. The trailing 12-month free cash flow was $494 million compared to $465 million in the prior year. At the end of the quarter, we had $197 million in cash in marketable investments. Our total debt at quarter end was $1.96 billion with a weighted average interest rate of 5.2%. Currently, 66% of our total debt is fixed rate. Our floating debt is pre-payable at any time and gives us the flexibility to use free cash flow to reduce outstanding floating debt balances in future periods. Turning to return of capital, we bought back 78,000 shares in the first quarter at an average price of $915 per share.

At the end of the quarter, we had $49 million remaining on the board authorization and as Will mentioned, we subsequently bought additional shares in January, exhausting the authorization, and this week we announced the new $500 million repurchase authorization, and we continue to view share repurchases as an attractive use of cash. And with that, I’ll turn it back to will for his final thoughts.

Will Lansing: Thanks, Steve. I am excited about our traction as we continue to drive more innovation than ever. In the Scores business, our financial inclusion efforts continue as we launched a FICO score aimed at helping Ukrainian refugees displaced through the war have access to credit. Additionally, we added our third historically black college and university, Delaware State University, as part of our FICO Educational Analytics Challenge. This is a program created to help promote diversity in data science, engineering, and technology. In the software business, we added 20 new enhancements to the FICO platform and expanded our patent footprint to over 220 patents by adding 10 patents related to digital decisioning, fraud detection, machine learning, and responsible AI.

And this innovation will be on display at FICO World 2024, where we will showcase how FICO truly supercharges our clients digital transformations. At this four-day event, which takes place in April, 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 will highlight successful clients and demonstrate the power of the FICO platform, enabling companies to operationalize analytics, become more composable, and make better decisions at scale. With that, I’ll turn the call back to Dave and we’ll open up the Q&A session.

Dave Singleton: Thanks, Will. This concludes our prepared remarks and we’re now ready to take questions. Operator, please open the lines.

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Q&A Session

Operator: Thank you so much. [Operator Instructions] And our first question is from the line of Faiza Alwy from Deutsche Bank. Please go ahead.

Faiza Alwy: Yes. Hi, thank you. Good afternoon. So, I first wanted to ask about software. You touched on this a little bit, but give us a bit more color on the software pipeline? As you said, you do have FICO World coming up, so what are some of the new things that we should watch for? And as part of that, if you can address some seasonality in the business, because we had a bit of a step down in ARR, so talk a bit about what your expectations are for ARR as we move through the year? Is the step down more seasonal, or should we expect sort of more of a structural slowdown?

Will Lansing: Yeah, I think it’s not so much — well, just to take this in reverse order, not really a seasonal thing so much as it is. Deals move around and they move from quarter to quarter and I would say this quarter, some deals were pushed to next quarter. We don’t see that as a very big deal. I mean, not something that we’re focused on. The pipeline is the strongest it has ever been, and it’s also the most mature it’s ever been. So I would say in terms of the stages of the pipeline, we’re seeing more maturity within the pipeline than we have in years past. So we’re actually feeling really good about the pipeline. In terms of what to expect at FICO World? I think that you’ll have what we traditionally do, which is take you through the latest and greatest in innovation from FICO.

We are also going to see a lot of customers who are delighted to stand up in front of their peers and explain all the value that they’re getting out of the FICO Platform. So I think you’ll see just a lot of reference customers. And part of FICO World is not just a sales event for us. It’s really an event for our customers to help sell to one another because they wind up being our best references. And so it’s a place where best practices get passed around and there’s a lot of adoption of FICO technology there.

Faiza Alwy: Great. Thank you. And then just switching on the Scores side, I wonder if anything has changed as it relates to your volume expectations for 2024. There has been — since you last reported earnings and gave the guide, it seems like the overall environment might be trending a little bit better. There’s at least some more optimism. So I’m curious if anything was different as it relates to your expectations in the quarter itself and how you’re thinking about volumes going forward?

Will Lansing: So we’re very comfortable with our guidance and we continue to see volumes roughly where we expected, frankly. I’m not sure I agree with the view that there’s more optimism. I mean, rates have ticked up in mortgages recently. And so if anything, I guess I feel like the fall in rates might be slower than a lot of industry pundits had been forecasting. That said, as you know, FICO is always very conservative in our view about these things. And so I wouldn’t say that we’re caught in any way by a little uptick in rates or by slowness in rates coming down. There’s no question that we will benefit tremendously as volumes increase when rates come down, and we anticipate that within the year and within next year. But I would say right now, no change in our outlook.

Faiza Alwy: Great. Thank you so much.

Operator: And our next question is from the line of Surinder Thind with Jefferies. Please go ahead.

Surinder Thind: Thank you. So, Will, just another follow up question on the software business. Can you talk a little bit about, I guess, the pipeline when it comes to kind of new clients? When I do the math, it looks like the pace at which new clients are bringing on ARR has been slowing for a number of quarters now. Just any color on your ability to bring onboard new clients at this point?

Will Lansing: We have not had any challenges bringing on new clients. I mean, as our penetration goes up, we will have captured more and more of our target enterprise customer base and more and more of the growth will be from the expand part of the business, which is more use cases and more volume with existing customers. It does take some time to onboard, so it doesn’t always show up instantly. But I think what you’re going to see over time is a mix shift from land to expand. Although we’re not having any trouble landing, we continue to land new customers.

Steve Weber: Yeah, I would just say Surinder that, when we start over this really new, the lead time is longer on them than on an existing customer. So that’s why you’ll see some of that. But we still sign a lot of new deals with a lot of new customers, or at least different use cases with customers that are using some of our legacy products.

Surinder Thind: Got it. And then in terms of just the color around the margins in the software business at this point, when I kind of go through the numbers, sounds like you’ve built in all of what you kind of need for this year in terms of your guide. So does that mean that incremental revenues, should they show up, generally will drop to the bottom line or how should we think about things like that?

Will Lansing: Yeah, that’s a great question. I think in general that’s a fair statement. We’re pretty comfortable with where the margins are and our expenses are running in line with what we expect and what we forecast and what we planned for. And so what you said is largely right, incremental revenue should fall through to the bottom line. That said, as incremental revenue comes in, we do reevaluate whether we want to devote some portion of that to additional resource for more rapid development. So will 100% of it follow the bottom line? I don’t know. We’ll see.

Surinder Thind: Thank you.

Operator: And our next question is from the line of Manav Patnaik with Barclays. Please go ahead.

Manav Patnaik: Thank you. Good evening, gentlemen. Steve, maybe just to follow up on that, if you could help with the software kind of cadence around the operating expense. Looks like, it ticked up sequentially, maybe a little bit higher than we thought. But since everything’s running in line, can you just walk us through how we should think about the expense spend there?

Steve Weber: Yeah, so, I mean, we talked about that a little bit last quarter, that we’re making some investments. There’s a lot of growth here and we think there’s a lot more room for growth. And we’re doing some investment on the R&D side to add more functionality, and we’re doing some investment on cybersecurity as well. So there is some investment coming in there. There’s a lot of different moving parts this quarter because we had the end of the year bonuses that happened too. So that rolls in here as well. So you’ll probably continue to see the expenses trend up through the year as we bring more people on. We have about 100 more people today than we had a year ago, right? So we’re investing, like we said, in those specific areas, but you’ll see the expenses throughout the year trend up, but not really all that dramatically.

Manav Patnaik: Okay, fair enough. And then Will, just in terms of the lending commentary, I think we all have our views on mortgage, let’s put that aside for a second. But can you just walk us through what’s going on in auto and card with both those down 3% and 5%, just anything to call out there and what the outlook for ’24 is really for those two categories?

Will Lansing: You know, I don’t have a lot of additional to add there. It’s down a little bit and again, not a gigantic surprise to us. I think we’re very kind of comfortable with that. It’s within our kind of range of forecast, so we wouldn’t consider it a big surprise. And in terms of guessing about the future, honestly, Manav, your guess is as good as ours. As you know, we’re a trailing indicator.

Manav Patnaik: Yeah. Fair enough. Thank you.

Operator: And our next question is from the line of Kyle Peterson with Needham. Please go ahead.

Kyle Peterson: Great. Thanks guys. Good afternoon. I wanted to continue on the expenses and kind of what you guys saw this quarter. I guess in terms of mix of revenue, it looks like there’s a lower amount of professional services, which usually would think of as kind of a bit of a drag on expenses. So just want to see how we should think about the relationship between services revenue and some of these buckets versus the expense growth. Like, is there any lag or how should we think about some of the puts and takes there?

Steve Weber: Yeah, I mean, so the professional services piece is a little bit unique because most of the PS work is done by internal resources. So in some cases, if they’re not working on billable deals, they’re working on R&D. In some cases we’ve moved people into that function as well. So those costs don’t necessarily go away. The professional services piece for us really is most of its implementation work that we do on the software side. So we don’t really look at that necessarily as a profit center. But in terms of, as an indicator of potential expenses, I think the PS tend to run in that $20 million to $25 million range. It’s little bit lower this quarter, but it’s never going to be a lot higher because we’re kind of downplaying that aspect. We don’t have as many resources in PS as we’ve had in past years. So I don’t think you’re ever going to see that really tick up or really have much of a material impact on the overall margin of the business.

Kyle Peterson: And maybe just to follow up on the guidance methodology, particularly on the Scores side, things, looks like it sounds like your overall revenue top line is pretty much unchanged and the volume assumptions seem the same. So I guess could you just confirm on the pricing assumptions and kind of maybe what actions you guys have taken on that front and if everything that went into effect on the first of the year is in the guidance or if there’s still kind of a wait and see approach with volumes?

Steve Weber: Well, there’s still obviously a lot of volatility on the volume. So I think next quarter, yeah, all the pricing went into effect in first part of January. We’ll have a lot more color that we can provide next quarter because we’ll see the impacts of all that. We’ll be that much farther into the year and we’ll know a lot more about what volumes look like and frankly, we’ll know a lot more about what the rate environment looks like probably in three months. So we’ll be able to provide more color for the rest of the year at that point.

Kyle Peterson: Got it. That’s helpful. Thanks, guys.

Operator: And our next question is from the line of George Tong with Goldman Sachs. Please go ahead.

George Tong: Hi. Thanks. Good afternoon. You’ve announced removing tiered pricing increases for mortgage scores this year. Can you talk a little bit about your pricing strategy for autos and credit cards and how pricing trends in these categories will likely compare with last year?

Will Lansing: So we have adjusted prices. You identified, you highlighted probably the biggest change in pricing this year, which was collapsing the tiers and mortgage. And that was really in response to a lot of feedback from the industry about a level playing field and so we accommodated that. In terms of the others, as you know, we adjust prices in every segment, every year, and it’s relatively surgical. We go pocket by pocket and think through what we can do. Virtually all of our scores have some level of CPI inflation pricing adjustment, and then others get some additional beyond that where we consider it appropriate. I would say that we did not take very significant actions in auto and card, not worth calling out separately and beyond kind of cost of living adjustment this year.

George Tong: Got it. That’s helpful. And can you provide a little bit of detail around some of the real-time trends that you’re seeing with mortgage inquiries and some of the real time trends that you’re seeing with card volumes and auto volumes?

Will Lansing: With mortgage, I’d say the surprise is that we’re seeing a little bit of refi activity. It doesn’t take very much for people to come back in the market and try to refinance their mortgages. And so even a point of decline is enough to generate some volume that we didn’t really anticipate. Steve, maybe you want to comment on the other.

Steve Weber: Yeah, I mean, in terms of real-time, frankly, most of the reporting we get is in arrears to some degree. So the numbers you can get from industry analysts are going to be much more real-time than what we can provide. There’s a lot of industry data that’s provided on a weekly basis, that’s going to be much more real-time than what we’ll be able to give you.

George Tong: And any — what about some of the arrears numbers that you’re seeing with cards and autos?

Steve Weber: Well, I think, like card was running a lot hotter last year, right? I mean, coming out of — when the refi slowed down, there was a big pickup in card, and we’re still seeing that it kind of slowed down in about a year ago now. So it’s pretty steady. I think there’s been a lot of pullback on the subprime markets. But overall, it’s not all that materially different, the volumes are not. They’ll fluctuate a little bit depending on even what some of the bigger players might do in any one given quarter. But again, that’s probably not as across the board as mortgage, which is more driven by consumer demand, that’s tied to interest rates.

George Tong: Great. And commentary on autos?

Steve Weber: Autos, I mean, autos is relatively stable and has been through that. I mean, it’s a few percent here or there, but you don’t see a lot of volatility in the auto market, at least on the lending side.

George Tong: Got it. Very helpful. Thank you.

Operator: [Operator Instructions] And our next question is from the line of Seth Weber with Wells Fargo Securities. Please go ahead.

Seth Weber: Hey, guys. Good afternoon. I wanted to ask, just to go back to the comment about some deals getting pushed to the second quarter. Is there anything idiosyncratic that you’d call out there, or is there any focus on any certain product customer categories or regions or anything that you attribute that to? Or are you just seeing an elongation of the sales cycle? Because I think in prior quarters you guys had talked about a shortening of the sales cycle. So I’m just trying to understand if there’s any kind of bigger change that’s going on here?

Will Lansing: No, not really. I mean, the sales cycle is roughly where it’s been lately, which is shorter than where it was a year or two years ago. I would say just there’s nothing special there. It’s probably worth reiterating that FICO, unlike a lot of other software companies, doesn’t do a lot of wheeling and dealing at the end of the quarter to pull in business and it is cultural with us. Our salespeople and all of our employees really live, act, believe in our number one corporate value, which is act like an owner. Again, we are really, truly aligned with shareholders. We think about it as a family business, and that includes the salespeople at end of quarter. And that’s not to say that we don’t make a push at the end of the quarter to close business.

Obviously, we do like everyone, but what’s not on the table is a bunch of extra discounting and Hail Mary type stuff, just to pull something a week earlier. We just don’t care. And you’ll never find FICO making radical concessions at quarter end to prop up a quarterly number. It’s just not who we. It’s just worth keeping that in mind. So when we say deals move from quarter to quarter, it has more to do with the client and their budget timeline and their approval process than it has to do with anything else.

Steve Weber: Yeah, and I would just say practically, we had some deals that we didn’t sign that last week of December just because it was hard to get people, right? I mean, you run into this issue every December that you might have people that are on vacation or traveling. You just can’t get the ink on the paper. So some of these deals have actually closed in January. So, I don’t — again, from Will’s point, that’s a great point. We’re not scrambling, trying to do everything humanly possible to get the deal signed in the last week of December as opposed to the first week of January.

Seth Weber: Got it. Okay. That’s helpful. Thanks. And then can you — just expanding on that a little bit, can you just update us on any traction that you’re seeing? Whatever traction you’re seeing kind of outside the financial services area for the platform business and whether you’re seeing bigger uptake there from non-traditional customers?

Will Lansing: Yeah, I would say that our platform business is still very much focused on financial services. The business we do outside financial services today, we do closely align stuff like insurance, we do that. But insurance have really non-financial services verticals. I would say the lion’s share of that is in the optimization area, where we have the world’s leading optimization engine. And so it’s used by airlines and retailers and all kinds of sports scheduling, and all kinds of places that are not as typical when you think of FICO. That said, our strategy around non-financial services is very much to go there through partners. We have a really robust and growing and ever stronger indirect salesforce where our partners focus on both geography — in geographies where we’re not so present.

And on — partners in geographies where we’re not present, and then on verticals where we’re not as represented. And I think you’ll see as our strategy evolves, and you’ve heard us talk about building an open ecosystem with a decisioning platform available to any B2C company interested in using it, that’s happening this year. And we will have open APIs this year, we will have software development kits for ISVs and retailers and bars, and those who want to take our decisioning solutions to other verticals. So you’ll see that starting to happen this year. But that’s really our strategy is to do that through partners. There’s not much of that, that we do directly.

Seth Weber: Got it. Okay. Thank you, guys. I appreciate it.

Operator: And our next question comes from the line of Ashish Sabadra with RBC Capital Markets. Please go ahead.

Ashish Sabadra: Thanks for taking my question. Just a quick question on the mortgage volume. Did you provide what the mortgage volume growth was in the first quarter of ’24?

Steve Weber: We don’t pull out the different components in terms of the volumes, but I mean, you can get the volumes from other third party sources pretty easily.

Ashish Sabadra: That’s helpful. And then maybe on the headwinds from the LatAm license revenue. Can you just remind us how much was that revenue in the prior year, 1Q ’23? Or how should we think about the growth in the business excluding that one-time headwind? And then as we go through the rest of the year, just curious if there’s any other license renewal headwind to be cognizant of? Thanks.

Steve Weber: There’s potentially license. I mean, the renewals are hard to project, frankly, because we don’t know when they’re going to renew or sometimes they’ll renew early, sometimes they will renew later if they’ll take on additional pieces. So the renewal pieces is difficult. If you look at the next couple of quarters, we had some pretty big point in time revenue last year in Q2 and Q3. So we may not have that again this year. Sometimes we have renewals that end up moving to the platform and they end up becoming a ratable revenue. So they don’t have upfront license revenue. So we’re actively trying to move people, obviously to the platform, which we forego the upfront license revenue in favor of recurring revenue. So as those happen, you’re going to see changes there.

That’s typical to companies that are moving a ratable revenue, but it’s been less dramatic for us because we’ve done over time. But there’s always the potential that you’re going to see that and you’ll have to think about that as different quarters come up.

Ashish Sabadra: Thank you.

Operator: And our next question comes from the line of Jeff Meuler with Baird. Please go ahead.

Jeff Meuler: Yeah, thank you. I didn’t understand the answer on the last question. The LatAm renewal the year ago, that was in Scores, not software, correct?

Steve Weber: Yeah, that was Scores. I’m sorry, that was in Scores. And the ones in — the ones in Scores happen occasionally. We’ll have license deal, typically foreign deals in areas where a large bank wants to build their own Score model and will sign deals with them. So that within Scores, we occasionally have those and it’s difficult to again, even with those it’s difficult to know what the — what the timing is going to be.

Jeffrey Meuler: Okay. And then just trying to — I guess probably the last question as well. Like the 21% growth in B2B Scores last quarter, 12% growth this quarter. How much of that slowdown is just due to the LatAm comp in the year ago or anything else that you can say on, like non-origination revenue trends, because it doesn’t look like a lot of…

Steve Weber: It’s completely due to LatAm and lower mortgage volumes in Q1 versus Q4, right. We’re volume takers, obviously, right? I mean, if the volumes are down, which they’re going to be. They’re going to be anyway, seasonally in that quarter. The December quarter has fewer mortgages typically than September quarter does. So it’s the combination of those two things. Outside of originations, that was up slightly, the non-originations business was up slightly, but not all that significant.

Jeffrey Meuler: Okay. And then can you just help me with any rough order of magnitude of sizing? If I look at your mortgage origination revenue, roughly how much of it comes from closed loans versus things like rate shopping or applications that don’t result in a closed loan or anything else that would fall in that bucket?

Steve Weber: Yeah, frankly, we don’t know because we don’t — actually, I think if you have to ask the bureaus, they’ll tell you the same thing. The bundles get pulled with Scores and data, and they don’t necessarily know — nobody necessarily knows (inaudible) the actual lender knows if it was closed or not. So we don’t really know whether they turned into a closed loan or not. That’s not reported to us.

Jeffrey Meuler: Okay. Thank you.

Operator: And our next question is from the line of Rajiv Bhatia with Morningstar. Please go ahead.

Rajiv Bhatia: Good evening. I’m sorry if I missed it, but can you provide what percentage of your Scores revenue was mortgage in the quarter? I know you’ve provided that in previous quarters.

Steve Weber: Yeah, we didn’t provide that. I don’t have that number in front of me. What the percentage was. So we don’t — we didn’t — occasionally we will do that. We didn’t provide that this quarter. So you could probably back into it if you took the numbers we gave you from last year and then the percentage increases.

Rajiv Bhatia: Okay, yeah, we can follow up. I guess, and then I know we talked about the Latin America kind of scores license, but if I look at the Asia score revenue in your 10-K or 10-Q, I think $5.9 million and definitely more than $4.1 million for all of fiscal 2023. I guess is that…

Steve Weber: Yeah, we had a license deal in Asia in Scores. So we had a much larger one in Latin America last year. And then we — if you look at it in any given quarter, probably half the time we have a license deal somewhere. But obviously the total license deals this year were much smaller — this year than they were last year, and that was because of the Latin American deal.

Rajiv Bhatia: Okay. Thank you.

Operator: And at this time, there are no more questions in the queue. I will now conclude the call. So thank you everyone for joining today’s call. This does conclude the conference call and we thank you for your participation and ask that you please disconnect your lines.