Fair Isaac Earnings: A Measured Start to Fiscal 2024

Though Fair Isaac maintained its fiscal 2024 outlook, its first fiscal quarter generally missed expectations. Revenue of $382 million, adjusted EBITDA of $188 million, and adjusted EPS of $4.81 were respectively 2%, 6%, and 5% below the FactSet consensus estimates. The culprit appears to be the firm’s scores segment. In addition, the firm’s software segment results were decent in our view, but growth did slow. Fair Isaac’s shares are trading at 54 times the 2024 consensus non-GAAP EPS estimate, which is a 2.4 times premium to the S&P 500 index. This 2.4 times premium is above its 1 year-average of 1.9 times. Overall, we believe Fair Isaac’s valuation leaves little room for error and thus expect a somewhat negative reaction in the firm’s stock. While we recognize many positive attributes of Fair Isaac’s business model, we view the firm’s shares as pricey and we will maintain our $810 fair value estimate and wide moat rating on Fair Isaac’s shares.