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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number 1-11689  
Fair Isaac Corporation
(Exact name of registrant as specified in its charter) 
Delaware94-1499887
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)
5 West Mendenhall, Suite 10559715
Bozeman,Montana
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: 406-982-7276  
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareFICONew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
No
The number of shares of common stock outstanding on April 12, 2024 was 24,710,938 (excluding 64,145,845 shares held by us as treasury stock).


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TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
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Item 6.
 


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Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2024September 30, 2023
 (In thousands, except par value data)
Assets
Current assets:
Cash and cash equivalents$135,667 $136,778 
Accounts receivable, net469,025 387,947 
Prepaid expenses and other current assets36,780 31,723
Total current assets641,472 556,448
Marketable securities41,407 33,014
Other investments1,252 1,223 
Property and equipment, net27,224 10,966 
Operating lease right-of-use assets28,283 25,703 
Goodwill776,376 773,327 
Intangible assets, net367 917 
Deferred income taxes72,249 59,136 
Other assets 114,487 114,547 
Total assets$1,703,117 $1,575,281 
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable$18,835 $19,009 
Accrued compensation and employee benefits68,805 102,471 
Other accrued liabilities68,936 59,478 
Deferred revenue143,544 136,730 
Current maturities on debt15,000 50,000 
Total current liabilities315,120 367,688 
Long-term debt 2,028,652 1,811,658 
Operating lease liabilities20,558 23,903 
Other liabilities74,447 60,022 
Total liabilities2,438,777 2,263,271 
Commitments and contingencies
Stockholders’ deficit:
Preferred stock ($0.01 par value; 1,000 shares authorized; none issued and outstanding)
  
Common stock ($0.01 par value; 200,000 shares authorized, 88,857 shares issued and 24,753 and 24,770 shares outstanding at March 31, 2024 and September 30, 2023, respectively)
248 248 
Additional paid-in-capital1,281,577 1,350,713 
Treasury stock, at cost (64,104 and 64,087 shares at March 31, 2024 and September 30, 2023, respectively)
(5,558,809)(5,324,865)
Retained earnings3,638,923 3,388,059 
Accumulated other comprehensive loss(97,599)(102,145)
Total stockholders’ deficit(735,660)(687,990)
Total liabilities and stockholders’ deficit$1,703,117 $1,575,281 
See accompanying notes.
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

 Quarter Ended March 31,Six Months Ended March 31,
 2024202320242023
 (In thousands, except per share data)
Revenues:
On-premises and SaaS software$177,180 $154,584 $345,848 $299,144 
Professional services19,744 27,175 41,023 49,497 
Scores236,885 198,507 428,997 376,495 
Total revenues433,809 380,266 815,868 725,136 
Operating expenses:
Cost of revenues86,946 79,806 170,407 156,375 
Research and development40,880 40,266 83,515 76,899 
Selling, general and administrative110,867 100,158 215,196 193,153 
Amortization of intangible assets275 275 550 550 
Gain on product line asset sale   (1,941)
Total operating expenses238,968 220,505 469,668 425,036 
Operating income194,841 159,761 346,200 300,100 
Interest expense, net(26,093)(23,897)(50,255)(46,697)
Other income, net3,986 1,605 7,379 1,969 
Income before income taxes172,734 137,469 303,324 255,372 
Provision for income taxes42,935 35,919 52,460 56,179 
Net income129,799 101,550 250,864 199,193 
Other comprehensive income (loss):
Foreign currency translation adjustments(4,157)6,552 4,546 24,933 
Comprehensive income$125,642 $108,102 $255,410 $224,126 
Earnings per share:
Basic$5.23 $4.04 $10.12 $7.94 
Diluted$5.16 $4.00 $9.96 $7.83 
Shares used in computing earnings per share:
Basic24,819 25,116 24,791 25,080 
Diluted25,154 25,419 25,186 25,431 

See accompanying notes.

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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Unaudited)
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Deficit
(In thousands) SharesPar Value
Balance at December 31, 202324,879 $249 $1,239,131 $(5,380,827)$3,509,124 $(93,442)$(725,765)
Share-based compensation— — 35,448 — — — 35,448 
Issuance of treasury stock under employee stock plans18  6,998 1,566 — — 8,564 
Repurchases of common stock(144)(1)— (179,548)— — (179,549)
Net income— — — — 129,799 — 129,799 
Foreign currency translation adjustments— — — — — (4,157)(4,157)
Balance at March 31, 202424,753 $248 $1,281,577 $(5,558,809)$3,638,923 $(97,599)$(735,660)
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Deficit
(In thousands) SharesPar Value
Balance at December 31, 202225,155 $252 $1,244,271 $(4,996,624)$3,056,327 $(106,321)$(802,095)
Share-based compensation— — 27,053 — — — 27,053 
Issuance of treasury stock under employee stock plans32  9,946 2,468 — — 12,414 
Repurchases of common stock(171)(2)— (116,265)— — (116,267)
Net income— — — — 101,550 — 101,550 
Foreign currency translation adjustments— — — — — 6,552 6,552 
Balance at March 31, 202325,016 $250 $1,281,270 $(5,110,421)$3,157,877 $(99,769)$(770,793)
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Deficit
(In thousands) SharesPar Value
Balance at September 30, 202324,770 $248 $1,350,713 $(5,324,865)$3,388,059 $(102,145)$(687,990)
Share-based compensation— — 67,022 — — — 67,022 
Issuance of treasury stock under employee stock plans205 2 (136,158)17,307 — — (118,849)
Repurchases of common stock(222)(2)— (251,251)— — (251,253)
Net income— — — — 250,864 — 250,864 
Foreign currency translation adjustments— — — — — 4,546 4,546 
Balance at March 31, 202424,753 $248 $1,281,577 $(5,558,809)$3,638,923 $(97,599)$(735,660)
Common StockAdditional
Paid-in-Capital
Treasury StockRetained EarningsAccumulated Other
Comprehensive Loss
Total
Stockholders’ Deficit
(In thousands) SharesPar Value
Balance at September 30, 202225,154 $252 $1,299,588 $(4,935,769)$2,958,684 $(124,702)$(801,947)
Share-based compensation— — 56,755 — — — 56,755 
Issuance of treasury stock under employee stock plans212 2 (75,073)16,615 — — (58,456)
Repurchases of common stock(350)(4)— (191,267)— — (191,271)
Net income— — — — 199,193 — 199,193 
Foreign currency translation adjustments— — — — — 24,933 24,933 
Balance at March 31, 202325,016 $250 $1,281,270 $(5,110,421)$3,157,877 $(99,769)$(770,793)
See accompanying notes.
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FAIR ISAAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended March 31,
 20242023
 (In thousands)
Cash flows from operating activities:
Net income$250,864 $199,193 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization6,178 8,294 
Share-based compensation67,022 56,755 
Deferred income taxes(13,041)(18,360)
Net gain on marketable securities(6,727)(1,681)
Non-cash operating lease costs6,772 7,613 
Provision for doubtful accounts838 738 
Gain on product line asset sale (1,941)
Net loss on sales and abandonment of property and equipment408 24 
Changes in operating assets and liabilities:
Accounts receivable(72,661)(13,789)
Prepaid expenses and other assets(12,490)(17,078)
Accounts payable(579)(2,810)
Accrued compensation and employee benefits(34,170)(32,318)
Other liabilities(5,049)(2,425)
Deferred revenue5,790 29 
Net cash provided by operating activities 193,155 182,244 
Cash flows from investing activities:
Purchases of property and equipment(5,403)(2,377)
Capitalized internal-use software costs(5,380) 
Proceeds from sales of marketable securities15,571 4,631 
Purchases of marketable securities(16,828)(8,015)
Cash transferred, net of proceeds, from product line asset sale (6,126)
Net cash used in investing activities(12,040)(11,887)
Cash flows from financing activities:
Proceeds from revolving line of credit and term loan255,000 228,000 
Payments on revolving line of credit and term loan(74,500)(158,500)
Payments on finance leases(1,400) 
Proceeds from issuance of treasury stock under employee stock plans14,937 15,217 
Taxes paid related to net share settlement of equity awards(133,786)(73,672)
Repurchases of common stock(243,473)(184,290)
Net cash used in financing activities (183,222)(173,245)
Effect of exchange rate changes on cash996 7,457 
Increase (decrease) in cash and cash equivalents(1,111)4,569 
Cash and cash equivalents, beginning of period136,778 133,202 
Cash and cash equivalents, end of period$135,667 $137,771 
Supplemental disclosures of cash flow information:
Cash paid for income taxes, net of refunds of $320 and $548 during the six-month periods ended March 31, 2024 and 2023, respectively
$53,757 $72,800 
Cash paid for interest$50,331 $46,801 
Supplemental disclosures of non-cash investing and financing activities:
Purchase of property and equipment included in accounts payable$439 $9 
Unsettled repurchases of common stock$7,780 $6,981 
Finance lease obligations incurred$9,400 $ 

See accompanying notes.
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FAIR ISAAC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Nature of Business
Fair Isaac Corporation
Fair Isaac Corporation (NYSE: FICO) (together with its consolidated subsidiaries, the “Company,” which may also be referred to in this report as “we,” “us,” “our,” or “FICO”) is a leading applied analytics company. We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO’s software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in more than 100 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO® Scores — the standard measure in the U.S. of consumer credit risk — empowering them to increase financial literacy and manage their financial health.
Principles of Consolidation and Basis of Presentation
We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with the instructions to Form 10-Q and the applicable accounting guidance. Consequently, we have not necessarily included all information and footnotes required for audited financial statements. In our opinion, the accompanying unaudited interim condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments, except as otherwise indicated) necessary for a fair presentation of our financial position and results of operations. These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with our audited consolidated financial statements and notes thereto presented in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. The interim financial information contained in this report is not necessarily indicative of the results to be expected for any other interim period or for the entire fiscal year.
The condensed consolidated financial statements include the accounts of FICO and its subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates
We make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the disclosures made in the accompanying notes. For example, we use estimates in determining the appropriate levels of various accruals; variable considerations included in the transaction price and standalone selling price of each performance obligation for our customer contracts; labor hours in connection with fixed-fee service contracts; the amount of our tax provision; and the realizability of deferred tax assets. We also use estimates in determining the remaining economic lives and carrying values of acquired intangible assets, property and equipment, and other long-lived assets. In addition, we use assumptions to estimate the fair value of reporting units and share-based compensation. Actual results may differ from our estimates.
New Accounting Pronouncements
Recent Accounting Pronouncements Adopted
In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606, Revenue from Contacts with Customers, in order to align the recognition of a contract liability with the definition of a performance obligation. We adopted ASU 2021-08 in the first quarter of fiscal 2024 and the adoption did not have a significant impact on our condensed consolidated financial statements.
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Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). ASU 2023-07 expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, which means that it will be effective for our annual periods beginning October 1, 2024, and our interim periods beginning October 1, 2025. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disaggregated information on income tax paid. The standard is effective for fiscal years beginning after December 15, 2024, which means that it will be effective for our fiscal years beginning October 1, 2025. Early adoption is permitted. We are currently evaluating the impact that the updated standard will have on our disclosures within our consolidated financial statements.
In March 2024, the Securities and Exchange Commission (“SEC”) issued Final Rule Release No. 33-11275, “The Enhancement and Standardization of Climate-Related Disclosures for Investors.” This rule will require registrants to provide certain climate disclosures in their annual reports, including certain climate-related financial metrics in their audited financial statements. The rule is effective for large accelerated filers beginning with annual reports for the fiscal year beginning in 2025, which means that it will be effective for our fiscal years beginning October 1, 2025. We are currently evaluating the impact that the final rule will have on our disclosures within our consolidated financial statements.
We do not expect that any other recently issued accounting pronouncements will have a significant effect on our consolidated financial statements.
2. Fair Value Measurements
Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The accounting guidance establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.
Level 1 — uses unadjusted quoted prices that are available in active markets for identical assets or liabilities. Our Level 1 assets were comprised of money market funds and certain marketable securities and our Level 1 liabilities included senior notes as of March 31, 2024 and September 30, 2023.
Level 2 — uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data. We did not have any assets or liabilities that are valued using inputs identified under a Level 2 hierarchy as of March 31, 2024 and September 30, 2023.
Level 3 — uses one or more significant inputs that are unobservable and supported by little or no market activity, and that reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, and significant management judgment or estimation. We did not have any assets or liabilities that are valued using inputs identified under a Level 3 hierarchy as of March 31, 2024 and September 30, 2023.
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The following tables represent financial assets that we measured at fair value on a recurring basis at March 31, 2024 and September 30, 2023:
March 31, 2024Active Markets for
Identical Instruments
(Level 1)
Fair Value as of
March 31, 2024
(In thousands)
Assets:
Cash equivalents (1)
$19,165 $19,165 
Marketable securities (2)
41,407 41,407 
Total$60,572 $60,572 
September 30, 2023Active Markets for
Identical Instruments
(Level 1)
Fair Value as of September 30, 2023
(In thousands)
Assets:
Cash equivalents (1)
$23,621 $23,621 
Marketable securities (2)
33,014 33,014 
Total$56,635 $56,635 
(1)Included in cash and cash equivalents on our condensed consolidated balance sheets at March 31, 2024 and September 30, 2023. Not included in these tables are cash deposits of $116.5 million and $113.2 million at March 31, 2024 and September 30, 2023, respectively.
(2)Represents securities held under a supplemental retirement and savings plan for certain officers and senior management employees, which are distributed upon termination or retirement of the employees. Included in marketable securities on our condensed consolidated balance sheets at March 31, 2024 and September 30, 2023.
See Note 6 for the fair value of our senior notes.
There were no transfers between Level 1, Level 2, and Level 3 of the fair value hierarchy during the quarters and six-month periods ended March 31, 2024 and 2023.
3. Derivative Financial Instruments
We use derivative instruments to manage risks caused by fluctuations in foreign exchange rates. The primary objective of our derivative instruments is to protect the value of foreign-currency-denominated receivable and cash balances from the effects of volatility in foreign exchange rates that might occur prior to conversion to their functional currencies. We principally utilize foreign currency forward contracts, which enable us to buy and sell foreign currencies in the future at fixed exchange rates and economically offset changes in foreign exchange rates. We routinely enter into contracts to offset exposures denominated in the British pound, Euro, and Singapore dollar.
Foreign currency-denominated receivable and cash balances are remeasured at foreign exchange rates in effect on the balance sheet date with the effects of changes in foreign exchange rates reported in other income, net. The forward contracts are not designated as hedges and are marked to market through other income, net. Fair value changes in the forward contracts help mitigate the changes in the value of the remeasured receivable and cash balances attributable to changes in foreign exchange rates. The forward contracts are short-term in nature and typically have average maturities at inception of less than three months.
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The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2024 and September 30, 2023:
 March 31, 2024
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 9,000 $9,718 $ 
Buy foreign currency:
British pound (GBP)GBP 9,670 $12,200 $ 
Singapore dollar (SGD)SGD10,487 $7,800 $ 
 September 30, 2023
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 12,900 $13,621 $ 
Buy foreign currency:
British pound (GBP)GBP 10,700 $13,100 $ 
Singapore dollar (SGD)SGD8,569 $6,300 $ 
The foreign currency forward contracts were entered into on March 31, 2024 and September 30, 2023; therefore, their fair value was $0 on each of these dates.
Gains (losses) on derivative financial instruments were recorded in our condensed consolidated statements of income and comprehensive income as a component of other income, net, and consisted of the following: 
 Quarter Ended March 31,Six Months Ended March 31,
 2024202320242023
 (In thousands)
Gains (losses) on foreign currency forward contracts
$(180)$309 $361 $1,613 

4. Goodwill
The following table summarizes changes to goodwill during the six months ended March 31, 2024, both in total and as allocated to our segments. As of March 31, 2024, there was no accumulated goodwill impairment loss.
ScoresSoftwareTotal
 (In thousands)
Balance at September 30, 2023$146,648 $626,679 $773,327 
Foreign currency translation adjustment 3,049 3,049 
Balance at March 31, 2024$146,648 $629,728 $776,376 
    
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5. Composition of Certain Financial Statement Captions
The following table presents the composition of property and equipment, net and other accrued liabilities at March 31, 2024 and September 30, 2023:
March 31,
2024
September 30,
2023
 (In thousands)
Property and equipment, net:
       Property and equipment$99,269 $98,967 
       Internal-use software5,380  
       Less: accumulated depreciation and amortization(77,425)(88,001)
      Total$27,224 $10,966 
Other accrued liabilities:
Interest payable$21,384 $20,770 
Current operating leases14,586 16,336 
Other32,966 22,372 
     Total$68,936 $59,478 
6. Debt
The following table represents our debt at carrying value at March 31, 2024 and September 30, 2023:
March 31,
2024
September 30,
2023
(In thousands)
Current maturities on debt:
     Revolving line of credit$ $35,000 
     Term loan15,000 15,000 
          Current maturities on debt15,000 50,000 
Long-term debt:
     Revolving line of credit488,000 265,000 
     Term loan251,250 258,750 
     The 2018 Senior Notes400,000 400,000 
     The 2019 Senior Notes and the 2021 Senior Notes900,000 900,000 
      Less: debt issuance costs(10,598)(12,092)
           Long-term debt2,028,652 1,811,658 
           Total debt$2,043,652 $1,861,658 
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Revolving Line of Credit and Term Loan
We have a $600 million unsecured revolving line of credit and a $300 million unsecured term loan with a syndicate of banks that mature on August 19, 2026. Borrowings under the revolving line of credit and term loan can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. The term loan requires principal payments in consecutive quarterly installments of $3.75 million on the last business day of each quarter. Interest rates on amounts borrowed under the revolving line of credit and term loan are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) one-month adjusted term Secured Overnight Financing Rate (“SOFR”) rate plus 1%, plus, in each case, an applicable margin, or (ii) an adjusted term SOFR rate plus an applicable margin. The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0% to 0.75% per annum and for SOFR borrowings ranges from 1% to 1.75% per annum. In addition, we must pay certain credit facility fees. The revolving line of credit and term loan contain certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and a minimum interest coverage ratio of 3.0 to 1.0. The credit agreement also contains other covenants typical of unsecured credit facilities.
As of March 31, 2024, we had $488.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 6.673%, and $266.3 million in outstanding balance of the term loan at an interest rate of 6.674%. We were in compliance with all financial covenants under this credit agreement as of March 31, 2024.
Senior Notes
On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”). The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25% per annum and will mature on May 15, 2026.
On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”). The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028.
On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes,” and collectively with the 2018 Senior Notes and the 2019 Senior Notes, the “Senior Notes”). The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028, the same date as the 2019 Senior Notes.
The indentures for the Senior Notes contain certain covenants typical of unsecured obligations and we were in compliance as of March 31, 2024.
The following table presents the face values and fair values for the Senior Notes at March 31, 2024 and September 30, 2023:
 March 31, 2024September 30, 2023
 Face ValueFair ValueFace ValueFair Value
 (In thousands)
The 2018 Senior Notes$400,000 $395,000 $400,000 $386,000 
The 2019 Senior Notes and the 2021 Senior Notes900,000 837,000 900,000 803,250 
       Total $1,300,000 $1,232,000 $1,300,000 $1,189,250 

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7. Revenue from Contracts with Customers
Disaggregation of Revenue
The following tables provide information about disaggregated revenue by primary geographical market:

Quarter Ended March 31, 2024
ScoresSoftwareTotalPercentage
(Dollars in thousands)
Americas$233,723 $130,294 $364,017 84 %
Europe, Middle East and Africa1,278 40,979 42,257 10 %
Asia Pacific1,884 25,651 27,535 6 %
      Total$236,885 $196,924 $433,809 100 %

Quarter Ended March 31, 2023
ScoresSoftwareTotalPercentage
(Dollars in thousands)
Americas$197,039 $121,264 $318,303 84 %
Europe, Middle East and Africa1,154 40,199 41,353 11 %
Asia Pacific314 20,296 20,610 5 %
      Total$198,507 $181,759 $380,266 100 %

Six Months Ended March 31, 2024
ScoresSoftwareTotalPercentage
(Dollars in thousands)
Americas$418,671 $263,856 $682,527 84 %
Europe, Middle East and Africa2,586 76,039 78,625 9 %
Asia Pacific7,740 46,976 54,716 7 %
      Total$428,997 $386,871 $815,868 100 %
Six Months Ended March 31, 2023
ScoresSoftwareTotalPercentage
(Dollars in thousands)
Americas$370,336 $239,094 $609,430 84 %
Europe, Middle East and Africa2,502 71,191 73,693 10 %
Asia Pacific3,657 38,356 42,013 6 %
      Total$376,495 $348,641 $725,136 100 %
The following table provides information about disaggregated revenue for our Software segment by deployment method:
Quarter Ended March 31,Percentage of revenuesSix Months Ended March 31,Percentage of revenues
20242023202420232024202320242023
(Dollars in thousands)
On-premises software$79,697 $73,473 45 %48 %$152,169 $138,395 44 %46 %
SaaS software97,483 81,111 55 %52 %193,679 160,749 56 %54 %
Total on-premises and SaaS software$177,180 $154,584 100 %100 %$345,848 $299,144 100 %100 %
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The following table provides information about disaggregated revenue for our Software segment by product features:
Quarter Ended March 31,Percentage of revenuesSix Months Ended March 31,Percentage of revenues
20242023202420232024202320242023
(Dollars in thousands)
Platform software$47,325 $38,682 27 %25 %$92,498 $69,510 27 %23 %
Non-platform software129,855 115,902 73 %75 %253,350 229,634 73 %77 %
Total on-premises and SaaS software$177,180 $154,584 100 %100 %$345,848 $299,144 100 %100 %
The following table provides information about disaggregated revenue for our Software segment by timing of revenue recognition:
Quarter Ended March 31,Percentage of revenuesSix Months Ended March 31,Percentage of revenues
20242023202420232024202320242023
(Dollars in thousands)
Software recognized at a point in time (1)
$20,177 $19,193 11 %12 %$33,959 $30,996 10 %10 %
Software recognized over contract term (2)
157,003 135,391 89 %88 %311,889 268,148 90 %90 %
Total on-premises and SaaS software$177,180 $154,584 100 %100 %$345,848 $299,144 100 %100 %
(1)Includes license portion of our on-premises subscription software and perpetual license, both of which are recognized when the software is made available to the customer, or at the start of the subscription.
(2)Includes maintenance portion and usage-based fees of our on-premises subscription software, maintenance revenue on perpetual licenses, as well as SaaS revenue.
The following table provides information about disaggregated revenue for our Scores segment by distribution method:

Quarter Ended March 31,Percentage of revenuesSix Months Ended March 31,Percentage of revenues
20242023202420232024202320242023
(Dollars in thousands)
Business-to-business Scores$185,508 $144,874 78 %73 %$325,950 $269,779 76 %72 %
Business-to-consumer Scores51,377 53,633 22 %27 %103,047 106,716 24 %28 %
     Total$236,885 $198,507 100 %100 %$428,997 $376,495 100 %100 %
We derive a substantial portion of revenues from our contracts with the three major consumer reporting agencies, TransUnion, Equifax and Experian. Revenues collectively generated by agreements with these customers accounted for 47% and 43% of our total revenues in the quarters ended March 31, 2024 and 2023, respectively, with all three consumer reporting agencies each contributing more than 10% of our total revenues in each of the quarters ended March 31, 2024 and 2023. Revenues collectively generated by agreements with these customers accounted for 43% and 40% of our total revenues in the six months ended March 31, 2024 and 2023, respectively, with three and two consumer reporting agencies each contributing more than 10% of our total revenues in the six months ended March 31, 2024 and 2023, respectively. At March 31, 2024 and September 30, 2023, two and one individual customers each accounted for 10% or more of total consolidated receivables, respectively.
Contract Balances
We record a receivable when we satisfy a performance obligation prior to invoicing if only the passage of time is required before payment is due or if we have an unconditional right to consideration before we satisfy a performance obligation. We record a contract asset when we satisfy a performance obligation prior to invoicing but our right to consideration is conditional. We record deferred revenue when the payment is made or due before we satisfy a performance obligation.
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Receivables at March 31, 2024 and September 30, 2023 consisted of the following: 
 March 31, 2024September 30, 2023
 (In thousands)
Billed$300,179 $234,745 
Unbilled213,023 203,896 
513,202 438,641 
Less: allowance for doubtful accounts(5,806)(4,978)
Net receivables507,396 433,663 
    Less: long-term receivables (*)(38,371)(45,716)
    Short-term receivables (*)$469,025 $387,947 
(*) Short-term receivables and long-term receivables were recorded in accounts receivable, net and other assets, respectively, within the accompanying condensed consolidated balance sheets.
Deferred revenue primarily relates to our maintenance and SaaS contracts billed annually in advance and generally recognized ratably over the term of the service period. Significant changes in the deferred revenues balances are as follows:
Six Months Ended  
March 31, 2024
(In thousands)
Deferred revenues, beginning balance (*)$143,235 
Revenue recognized that was included in the deferred revenues balance at the beginning of the period(102,063)
Increases due to billings, excluding amounts recognized as revenue during the period108,904 
Deferred revenues, ending balance (*)$150,076 
(*) Deferred revenues at March 31, 2024 included current portion of $143.6 million and long-term portion of $6.5 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets. Deferred revenues at September 30, 2023 included current portion of $136.7 million and long-term portion of $6.5 million that were recorded in deferred revenue and other liabilities, respectively, within the condensed consolidated balance sheets.
Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to provide customers with financing or to receive financing from our customers. Examples include multi-year on-premises licenses that are invoiced annually with revenue recognized upfront and invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period.
Performance Obligations
Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. This does not include:
Usage-based revenue that will be recognized in future periods from on-premises software subscriptions;
Consumption-based variable fees from SaaS software that will be recognized in the distinct service period during which it is earned; and
Revenue from variable considerations that will be recognized in accordance with the “right-to-invoice” practical expedient, such as fees from our professional services billed based on a time and materials basis.
Revenue allocated to remaining performance obligations was $481.7 million as of March 31, 2024, approximately 50% of which we expect to recognize over the next 16 months and the remainder thereafter. Revenue allocated to remaining performance obligations was $470.5 million as of September 30, 2023.
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8. Income Taxes
Effective Tax Rate
The effective income tax rate was 24.9% and 26.1% during the quarters ended March 31, 2024 and 2023, respectively, and 17.3% and 22.0% during the six months ended March 31, 2024 and 2023, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution.
A provision enacted as part of the 2022 Inflation Reduction Act imposes a 15% corporate minimum tax. The provision is effective for tax years beginning after December 31, 2022, which means that it was effective for our fiscal year beginning October 1, 2023. We do not expect any impact to our fiscal 2024 effective tax rate from the corporate minimum tax provision.
The total unrecognized tax benefit for uncertain tax positions was estimated to be $15.7 million and $13.8 million at March 31, 2024 and September 30, 2023, respectively. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our condensed consolidated statements of income and comprehensive income. We accrued interest of $1.5 million and $0.9 million related to unrecognized tax benefits as of March 31, 2024 and September 30, 2023, respectively.
9. Earnings per Share
The following table presents reconciliations for the numerators and denominators of basic and diluted earnings per share (“EPS”) for the quarters and six-month periods ended March 31, 2024 and 2023: 
 Quarter Ended March 31,Six Months Ended March 31,
 2024202320242023
 (In thousands, except per share data)
Numerator for diluted and basic earnings per share:
Net income$129,799 $101,550 $250,864 $199,193 
Denominator — share:
Basic weighted-average shares24,819 25,116 24,791 25,080 
       Effect of dilutive securities335 303 395 351 
Diluted weighted-average shares25,154 25,419 25,186 25,431 
Earnings per share:
Basic$5.23 $4.04 $10.12 $7.94 
Diluted$5.16 $4.00 $9.96 $7.83 
Anti-dilutive share-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.
10. Segment Information
We are organized into two reportable segments: Scores and Software. Although we sell solutions and services to a large number of end user product and industry markets, our reportable business segments reflect the primary method in which management organizes and evaluates internal financial information to make operating decisions and assess performance.
Scores. This segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.
Software. This segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. These offerings are available to our customers as SaaS or as on-premises software.
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Our chief operating decision maker (“CODM”), who is our Chief Executive Officer, evaluates segment financial performance based on segment revenues and segment operating income. Segment operating expenses consist of direct and indirect costs principally related to personnel, facilities, IT infrastructure, consulting, travel and depreciation. Indirect costs are allocated to the segments generally based on relative segment revenues, fixed rates established by management based upon estimated expense contribution levels and other assumptions that management considers reasonable. We do not allocate broad-based incentive expense, share-based compensation expense, restructuring and acquisition-related expense, amortization expense, various corporate charges and certain other income and expense measures to our segments. These income and expense items are not allocated because they are not considered in evaluating the segment’s operating performance. Our CODM does not evaluate the financial performance of each segment based on its respective assets or capital expenditures; rather, depreciation amounts are allocated to the segments from their internal cost centers as described above.
The following tables summarize segment information for the quarters and six-month periods ended March 31, 2024 and 2023:
 Quarter Ended March 31, 2024
 ScoresSoftwareUnallocated
Corporate
Expenses
Total
 (In thousands)
Segment revenues:
On-premises and SaaS software$ $177,180 $— $177,180 
Professional services 19,744 — 19,744 
Scores236,885  — 236,885 
Total segment revenues236,885 196,924 — 433,809 
Segment operating expense(24,677)(132,762)(45,806)(203,245)
Segment operating income$212,208 $64,162 $(45,806)230,564 
Unallocated share-based compensation expense(35,448)
Unallocated amortization expense(275)
Operating income194,841 
Unallocated interest expense, net(26,093)
Unallocated other income, net3,986 
Income before income taxes$172,734 
Depreciation expense$107 $2,099 $16 $2,222 

 Quarter Ended March 31, 2023
 ScoresSoftwareUnallocated
Corporate
Expenses
Total
 (In thousands)
Segment revenues:
On-premises and SaaS software$ $154,584 $— $154,584 
Professional services 27,175 — 27,175 
Scores198,507  — 198,507 
Total segment revenues198,507 181,759 — 380,266 
Segment operating expense(23,102)(126,892)(43,183)(193,177)
Segment operating income$175,405 $54,867 $(43,183)187,089 
Unallocated share-based compensation expense(27,053)
Unallocated amortization expense(275)
Operating income159,761 
Unallocated interest expense, net(23,897)
Unallocated other income, net1,605 
Income before income taxes$137,469 
Depreciation expense$138 $2,723 $20 $2,881 
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 Six Months Ended March 31, 2024
 ScoresSoftwareUnallocated
Corporate
Expenses
Total
 (In thousands)
Segment revenues:
On-premises and SaaS software$ $345,848 $— $345,848 
Professional services 41,023 — 41,023 
Scores428,997  — 428,997 
Total segment revenues428,997 386,871 — 815,868 
Segment operating expense(48,135)(267,587)(86,374)(402,096)
Segment operating income$380,862 $119,284 $(86,374)413,772 
Unallocated share-based compensation expense(67,022)
Unallocated amortization expense(550)
Operating income346,200 
Unallocated interest expense, net(50,255)
Unallocated other income, net7,379 
Income before income taxes$303,324 
Depreciation expense$188 $3,697 $28 $3,913 
 Six Months Ended March 31, 2023
 ScoresSoftwareUnallocated
Corporate
Expenses
Total
 (In thousands)
Segment revenues:
On-premises and SaaS software$ $299,144 $— $299,144 
Professional services 49,497 — 49,497 
Scores376,495  — 376,495 
Total segment revenues376,495 348,641 — 725,136 
Segment operating expense(44,398)(248,009)(77,265)(369,672)
Segment operating income$332,097 $100,632 $(77,265)355,464 
Unallocated share-based compensation expense(56,755)
Unallocated amortization expense(550)
Unallocated gain on product line asset sale1,941 
Operating income300,100 
Unallocated interest expense, net(46,697)
Unallocated other income, net1,969 
Income before income taxes$255,372 
Depreciation expense$289 $5,697 $42 $6,028 
11. Contingencies
We are in disputes with certain customers regarding amounts owed in connection with the sale of certain of our products and services. We also have had claims asserted by former employees relating to compensation and other employment matters. We are also involved in various other claims and legal actions arising in the ordinary course of business. We record litigation accruals for legal matters which are both probable and estimable. For legal proceedings for which there is a reasonable possibility of loss (meaning those losses for which the likelihood is more than remote but less than probable), we have determined we do not have a material exposure, either individually or in the aggregate.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
Statements contained in this report that are not statements of historical fact should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). In addition, certain statements in our future filings with the Securities and Exchange Commission (“SEC”), in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the PSLRA. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, income or loss, expenses, earnings or loss per share, the payment or nonpayment of dividends, share repurchases, capital structure and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, research and development, and the sufficiency of capital resources; (iii) statements of assumptions underlying such statements, including those related to economic conditions; (iv) statements regarding results of business combinations or strategic divestitures; (v) statements regarding business relationships with vendors, customers or collaborators, including the proportion of revenues generated from international as opposed to domestic customers; and (vi) statements regarding products and services, their characteristics, performance, sales potential or effect in use by customers. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “should,” “potential,” “goals,” “strategy,” “outlook,” “plan,” “estimated,” “will,” variations of these terms and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Part I, Item 1A Risk Factors of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 and in subsequent filings with the SEC. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Forward-looking statements are qualified by some or all of these risk factors. Therefore, you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Such forward-looking statements speak only as of the date on which statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances. Readers should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

OVERVIEW
We were founded in 1956 on the premise that data, used intelligently, can improve business decisions. Today, FICO’s software and the widely used FICO® Score operationalize analytics, enabling thousands of businesses in more than 100 countries to uncover new opportunities, make timely decisions that matter, and execute them at scale. Most leading banks and credit card issuers rely on our solutions, as do insurers, retailers, telecommunications providers, automotive lenders, consumer reporting agencies, public agencies, and organizations in other industries. We also serve consumers through online services that enable people to access and understand their FICO® Scores — the standard measure in the U.S. of consumer credit risk — empowering them to increase financial literacy and manage their financial health.
Our business consists of two operating segments: Scores and Software.
Our Scores segment includes our business-to-business (“B2B”) scoring solutions and services which give our clients access to predictive credit and other scores that can be easily integrated into their transaction streams and decision-making processes. This segment also includes our business-to-consumer (“B2C”) scoring solutions, including our myFICO.com subscription offerings.
Our Software segment includes pre-configured analytic and decision management solutions designed for a specific type of business need or process — such as account origination, customer management, customer engagement, fraud detection, and marketing — as well as associated professional services. This segment also includes FICO® Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by our customers to address a wide variety of business use cases. Our offerings are available to our customers as software-as-a-service (“SaaS”) or as on-premises software.
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Highlights from the quarter and six months ended March 31, 2024
Total revenue was $433.8 million during the quarter ended March 31, 2024, a 14% increase from the quarter ended March 31, 2023, and $815.9 million during the six months ended March 31, 2024, a 13% increase from the six months ended March 31, 2023.
Total revenue for our Scores segment was $236.9 million during the quarter ended March 31, 2024, a 19% increase from the quarter ended March 31, 2023, and $429.0 million during the six months ended March 31, 2024, a 14% increase from the six months ended March 31, 2023.
Annual Recurring Revenue for our Software segment as of March 31, 2024 was $697.0 million, a 14% increase from March 31, 2023.
Dollar-Based Net Retention Rate for our Software segment was 112% as of March 31, 2024.
Operating income was $194.8 million during the quarter ended March 31, 2024, a 22% increase from the quarter ended March 31, 2023, and $346.2 million during the six months ended March 31, 2024, a 15% increase from the six months ended March 31, 2023.
Net income was $129.8 million during the quarter ended March 31, 2024, a 28% increase from the quarter ended March 31, 2023, and $250.9 million during the six months ended March 31, 2024, a 26% increase from the six months ended March 31, 2023.
Diluted EPS was $5.16 during the quarter ended March 31, 2024, a 29% increase from the quarter ended March 31, 2023, and $9.96 during the six months ended March 31, 2024, a 27% increase from the six months ended March 31, 2023.
Cash flows from operating activities were $193.2 million during the six months ended March 31, 2024, compared with $182.2 million during the six months ended March 31, 2023.
Cash and cash equivalents were $135.7 million as of March 31, 2024, compared with $136.8 million as of September 30, 2023.
Total debt balance was $2.0 billion as of March 31, 2024, compared with $1.9 billion as of September 30, 2023.
Total share repurchases during the quarter ended March 31, 2024 were $179.5 million, compared with $116.3 million during the quarter ended March 31, 2023, and during the six months ended March 31, 2024 were $251.3 million, compared with $191.3 million during the six months ended March 31, 2023.
Key performance metrics for Software segment
Annual Contract Value Bookings (“ACV Bookings”)
Management regards ACV Bookings as an important indicator of future revenues, but it is not comparable to, nor is it a substitute for, an analysis of our revenues and other U.S. generally accepted accounting principles (“U.S. GAAP”) measures. We define ACV Bookings as the average annualized value of software contracts signed in the current reporting period that generate current and future on-premises and SaaS software revenue. We only include contracts with an initial term of at least 24 months and we exclude perpetual licenses and other software revenues that are non-recurring in nature. For renewals of existing software subscription contracts, we count only incremental annual revenue expected over the current contract as ACV Bookings.
ACV Bookings is calculated by dividing the total expected contract value by the contract term in years. The expected contract value equals the fixed amount — including guaranteed minimums, if any — stated in the contract, plus estimates of future usage-based fees. We develop estimates from discussions with our customers and examinations of historical data from similar products and customer arrangements. Differences between estimates and actual results occur due to variability in the estimated usage. This variability can be the result of the economic trends in our customers’ industries, individual performance of our customers relative to their competitors, and regulatory and other factors that affect the business environment in which our customers operate. For each of the periods presented, ACV Bookings related to estimates of future usage-based fees was approximately 30% of the total ACV Bookings amount. Differences between the initial estimates of future usage-based fees and actual results historically have not been material and we do not currently expect that they will be materially different in the future.
We disclose estimated revenue expected to be recognized in the future related to remaining performance obligations in Note 7 to the accompanying condensed consolidated financial statements. However, we believe ACV Bookings is a useful supplemental measure of our business as it includes estimated revenues and future billings excluded from Note 7, such as usage-based fees and guaranteed minimums derived from our on-premises software licenses, among others.
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The following table summarizes our ACV Bookings during the periods indicated:
Quarter Ended March 31,Six Months Ended March 31,
2024202320242023 *
(In millions)
Total on-premises and SaaS software$16.8 $23.3 $35.1 $44.8 

(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the amount above excludes this product line for the six months ended March 31, 2023.
Annual Recurring Revenue (“ARR”)
Accounting Standards Codification Topic 606, Revenue from Contacts with Customers, requires us to recognize a significant portion of revenue from our on-premises software subscriptions at the point in time when the software is first made available to the customer, or at the beginning of the subscription term, despite the fact that our contracts typically call for billing these amounts ratably over the life of the subscription. The remaining portion of our on-premises software subscription revenue including maintenance and usage-based fees are recognized over the life of the contract. This point-in-time recognition of a portion of our on-premises software subscription revenue creates significant variability in the revenue recognized period to period based on the timing of the subscription start date and the subscription term. Furthermore, this point-in-time revenue recognition can create a significant difference between the timing of our revenue recognition and the actual customer billing under the contract. We use ARR to measure the underlying performance of our subscription-based contracts and mitigate the impact of this variability. ARR is defined as the annualized revenue run-rate of on-premises and SaaS software agreements within a quarterly reporting period, and as such, is different from the timing and amount of revenue recognized. All components of our software licensing and subscription arrangements that are not expected to recur (primarily perpetual licenses) are excluded. We calculate ARR as the quarterly recurring revenue run-rate multiplied by four.
The following table summarizes our ARR for on-premises and SaaS software exiting each of the dates presented:
June 30,
2022
September 30, 2022December 31, 2022March 31, 2023June 30,
2023
September 30, 2023December 31,
2023
March 31,
2024
ARR (*)
(In millions)
Platform$107.2$113.1$132.8$152.5$164.1$173.2$190.3$201.4
Non-platform432.3437.0450.1461.0481.8496.2497.4495.6
     Total$539.5$550.1$582.9$613.5$645.9$669.4$687.7$697.0
Percentage
Platform20 %21 %23 %25 %25 %26 %28 %29 %
Non-platform80 %79 %77 %75 %75 %74 %72 %71 %
     Total100 %100 %100 %100 %100 %100 %100 %100 %
YoY Change
Platform62 %54 %46 %60 %53 %53 %43 %32 %
Non-platform%%%%11 %14 %11 %%
     Total10 %10 %11 %17 %20 %22 %18 %14 %
(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the amounts and percentages above exclude this product line at June 30, 2022, September 30, 2022 and December 31, 2022.

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Dollar-Based Net Retention Rate (“DBNRR”)
We consider DBNRR to be an important measure of our success in retaining and growing revenue from our existing customers. To calculate DBNRR for any period, we compare the ARR at the end of the prior comparable quarter (“base ARR”) to the ARR from that same cohort of customers at the end of the current quarter (“retained ARR”); we then divide the retained ARR by the base ARR to arrive at the DBNRR. Our calculation includes the positive impact among this cohort of customers of selling additional products, price increases and increases in usage-based fees, and the negative impact of customer attrition, price decreases, and decreases in usage-based fees during the period. However, the calculation does not include the positive impact from sales to any new customers acquired during the period. Our DBNRR may increase or decrease from period to period as a result of various factors, including the timing of new sales and customer renewal rates.
The following table summarizes our DBNRR for on-premises and SaaS software exiting each of the dates presented:
June 30,
2022
September 30, 2022December 31, 2022March 31, 2023June 30,
2023
September 30, 2023December 31,
2023
March 31,
2024
DBNRR (*)
Platform137 %129 %130 %146 %142 %145 %136 %126 %
Non-platform101 %101 %103 %105 %109 %111 %108 %106 %
     Total109 %109 %110 %114 %117 %120 %114 %112 %
(*) We sold certain assets related to our Siron compliance business during the quarter ended December 31, 2022, and the percentages above exclude this product line at June 30, 2022, September 30, 2022 and December 31, 2022.

RESULTS OF OPERATIONS
We are organized into two reportable segments: Scores and Software. Although we sell solutions and services into a large number of end user product and industry markets, our reportable business segments reflect the primary method in which management organizes and evaluates internal financial information to make operating decisions and assess performance.
Segment revenues, operating income, and related financial information, including disaggregation of revenue, are set forth in Note 7 and Note 10 to the accompanying condensed consolidated financial statements.
Revenues
The following tables set forth certain summary information on a segment basis related to our revenues for the quarters and six-month periods ended March 31, 2024 and 2023:
Quarter Ended March 31,Percentage of RevenuesPeriod-to-Period ChangePeriod-to-Period
Percentage Change
Segment2024202320242023
 (In thousands)  (In thousands) 
Scores$236,885 $198,507 55 %52 %$38,378 19 %
Software196,924 181,759 45 %48 %15,165 %
Total$433,809 $380,266 100 %100 %53,543 14 %
    
 Six Months Ended March 31,Percentage of RevenuesPeriod-to-Period ChangePeriod-to-Period
Percentage Change
Segment2024202320242023
 (In thousands)  (In thousands) 
Scores$428,997 $376,495 53 %52 %$52,502 14 %
Software386,871 348,641 47 %48 %38,230 11 %
Total$815,868 $725,136 100 %100 %90,732 13 %



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Quarter Ended March 31, 2024 Compared to Quarter Ended March 31, 2023
Scores
Scores segment revenues increased $38.4 million due to an increase of $40.6 million in our business-to-business scores revenue, partially offset by a decrease of $2.2 million in our business-to-consumer revenue. The increase in business-to-business scores revenue was primarily attributable to a higher unit price, partially offset by a decrease in volume of mortgage originations. The decrease in business-to-consumer revenue was primarily attributable to a decrease in direct sales generated from the myFICO.com website.
Software
Quarter Ended March 31,Period-to-Period ChangePeriod-to-Period
Percentage Change
 20242023
 (In thousands)(In thousands) 
On-premises and SaaS software
$177,180 $154,584 $22,596 15 %
Professional services19,744 27,175 (7,431)(27)%
Total$196,924 $181,759 15,165 %
Software segment revenues increased $15.2 million due to a $22.6 million increase in our on-premises and SaaS software revenue, partially offset by a $7.4 million decrease in professional services revenue. The increase in our on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over-time largely driven by SaaS growth. The decrease in professional services revenue was primarily attributable to our strategy to emphasize higher-margin software over professional services.
Six Months Ended March 31, 2024 Compared to Six Months Ended March 31, 2023
Scores
Scores segment revenues increased $52.5 million due to an increase of $56.2 million in our business-to-business scores revenue, partially offset by a decrease of $3.7 million in our business-to-consumer revenue. The increase in business-to-business scores revenue was primarily attributable to a higher unit price, partially offset by a decrease in volume of mortgage originations. The decrease in business-to-consumer revenue was primarily attributable to a decrease in direct sales generated from the myFICO.com website.
Software
Six Months Ended March 31,Period-to-Period ChangePeriod-to-Period
Percentage Change
 20242023
 (In thousands)(In thousands) 
On-premises and SaaS software
$345,848 $299,144 $46,704 16 %
Professional services41,023 49,497 (8,474)(17)%
Total$386,871 $348,641 38,230 11 %
Software segment revenues increased $38.2 million due to a $46.7 million increase in our on-premises and SaaS software revenue, partially offset by an $8.5 million decrease in professional services revenue. The increase in our on-premises and SaaS software revenue was primarily attributable to an increase in revenue recognized over-time largely driven by SaaS growth. The decrease in professional services revenue was primarily attributable to our strategy to emphasize higher-margin software over professional services.
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Operating Expenses and Other Income (Expense), Net
The following tables set forth certain summary information related to our condensed consolidated statements of income and comprehensive income for the quarters and six-month periods ended March 31, 2024 and 2023:
 Quarter Ended March 31,Percentage of RevenuesPeriod-to-Period ChangePeriod-to-
Period
Percentage Change
 2024202320242023
 (In thousands, except
employees)
  (In thousands,
except employees)
 
Revenues$433,809 $380,266 100 %100 %$53,543 14 %
Operating expenses:
Cost of revenues86,946 79,806 20 %21 %7,140 %
Research and development40,880 40,266 %11 %614 %
Selling, general and administrative110,867 100,158 26 %26 %10,709 11 %
Amortization of intangible assets275 275 — %— %— — %
Total operating expenses238,968 220,505 55 %58 %18,463 %
Operating income194,841 159,761 45 %42 %35,080 22 %
Interest expense, net(26,093)(23,897)(6)%(6)%(2,196)%
Other income, net3,986 1,605 %— %2,381 148 %
Income before income taxes172,734 137,469 40 %36 %35,265 26 %
Provision for income taxes 42,935 35,919 10 %%7,016 20 %
Net income$129,799 $101,550 30 %27 %28,249 28 %
Number of employees at quarter end3,550 3,320 230 %

 Six Months Ended March 31,Percentage of RevenuesPeriod-to-Period ChangePeriod-to-
Period
Percentage Change
 2024202320242023
 (In thousands)  (In thousands) 
Revenues$815,868 $725,136 100 %100 %$90,732 13 %
Operating expenses:
Cost of revenues170,407 156,375 21 %21 %14,032 %
Research and development83,515 76,899 10 %11 %6,616 %
Selling, general and administrative215,196 193,153 27 %27 %22,043 11 %
Amortization of intangible assets550 550 — %— %— — %
Gain on product line asset sale— (1,941)— %— %1,941 (100)%
Total operating expenses469,668 425,036 58 %59 %44,632 11 %
Operating income346,200 300,100 42 %41 %46,100 15 %
Interest expense, net(50,255)(46,697)(6)%(6)%(3,558)%
Other income, net7,379 1,969 %— %5,410 275 %
Income before income taxes303,324 255,372 37 %35 %47,952 19 %
Provision for income taxes52,460 56,179 %%(3,719)(7)%
Net income$250,864 $199,193 31 %27 %51,671 26 %
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Cost of Revenues
Cost of revenues consists primarily of employee salaries, incentives, and benefits for personnel directly involved in delivering software products, operating SaaS infrastructure, and providing support, implementation and consulting services; overhead, facilities and data center costs; software royalty fees; credit bureau data and processing services; third-party hosting fees related to our SaaS services; travel costs; and outside services.
The quarter-over-prior year quarter increase in cost of revenues of $7.1 million was primarily attributable to a $2.5 million increase in infrastructure and facilities costs, a $2.0 million increase in personnel and labor costs, and a $2.0 million increase in direct materials costs. The increase in infrastructure and facilities costs was primarily attributable to increased third-party data center hosting costs. The increase in personnel and labor costs was primarily attributable to increased headcount and increased share-based compensation expense, partially offset by decreased incentive expense. The increase in direct materials costs was primarily attributable to increased telecommunications expenses to support FICO® Customer Communications Services revenue. Cost of revenues as a percentage of revenues decreased to 20% during the quarter ended March 31, 2024 from 21% during the quarter ended March 31, 2023, primarily due to increased sales of our higher-margin Scores products and decreased sales of lower-margin professional services.
The year-to-date period-over-period increase in cost of revenues of $14.0 million was primarily attributable to a $6.1 million increase in personnel and labor costs, a $3.8 million increase in infrastructure and facilities costs, and a $2.9 million increase in direct materials costs. The increase in personnel and labor costs was primarily attributable to increased headcount and increased share-based compensation expense, partially offset by decreased incentive expense. The increase in infrastructure and facilities costs was primarily attributable to increased third-party data center hosting costs. The increase in direct materials costs was primarily attributable to increased telecommunications expenses to support FICO® Customer Communications Services revenue. Cost of revenues as a percentage of revenues remained consistent at 21% during the six months ended March 31, 2024 and 2023.
Research and Development
Research and development expenses include personnel and related overhead costs incurred in the development of new products and services, including research of mathematical and statistical models and development of new versions of Software products.
The quarter-over-prior year quarter increase in research and development expenses of $0.6 million was primarily attributable to an increase in third-party consulting expenses. Research and development expenses as a percentage of revenues decreased to 9% during the quarter ended March 31, 2024 from 11% during the quarter ended March 31, 2023.
The year-to-date period-over-period increase in research and development expenses of $6.6 million was primarily attributable to an increase in personnel and labor costs as a result of increased headcount and increased share-based compensation expense, and increased third-party data center hosting costs. Research and development expenses as a percentage of revenues decreased to 10% during the six months ended March 31, 2024 from 11% during the six months ended March 31, 2023.
Selling, General and Administrative
Selling, general and administrative expenses consist principally of employee salaries, incentives, commissions and benefits; travel costs; overhead costs; advertising and other promotional expenses; corporate facilities expenses; legal expenses; and business development expenses.
The quarter-over-prior year quarter increase in selling, general and administrative expenses of $10.7 million was primarily attributable to a $9.9 million increase in personnel and labor costs and a $1.1 million increase in travel costs. The increase in personnel and labor costs was primarily attributable to increased share-based compensation expense, increased headcount, and increased fringe benefit costs related to our supplemental retirement and savings plan, partially offset by decreased incentive expense. The increase in travel costs was primarily attributable to promotional and corporate events. Selling, general and administrative expenses as a percentage of revenues remained consistent at 26% during the quarters ended March 31, 2024 and 2023.
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The year-to-date period-over-period increase in selling, general and administrative expenses of $22.0 million was primarily attributable to a $17.3 million increase in personnel and labor costs, a $2.2 million increase in travel costs, and a $1.8 million increase in infrastructure and facilities costs. The increase in personnel and labor costs was primarily attributable to increased headcount, increased share-based compensation expense, increased fringe benefit costs related to our supplemental retirement and savings plan, and increased commission expense, partially offset by decreased incentive expense. The increase in travel costs was primarily attributable to promotional and corporate events. The increase in infrastructure and facilities costs was primarily attributable to the impact of a favorable adjustment in the prior year period from the termination of an office lease. Selling, general and administrative expenses as a percentage of revenues remained consistent at 27% during the six months ended March 31, 2024 and 2023.
Amortization of Intangible Assets
Amortization of intangible assets consists of expense related to intangible assets recorded in connection with our acquisitions. Our finite-lived intangible assets, consisting primarily of completed technology and customer contracts and relationships, are amortized using the straight-line method over five years.
Amortization expense was $0.3 million during each of the quarters ended March 31, 2024 and 2023.
Amortization expense was $0.6 million during each of the six months ended March 31, 2024 and 2023.
Gain on Product Line Asset Sale
The $1.9 million gain on product line asset sale during the six months ended March 31, 2023 was attributable to the sale of certain assets related to our Siron compliance business.
Interest Expense, Net
Interest expense includes interest on the senior notes issued in December 2021, December 2019 and May 2018, as well as interest and credit agreement fees on the revolving line of credit and term loan. On our condensed consolidated statements of income and comprehensive income, interest expense is netted with interest income, which is derived primarily from the investment of funds in excess of our immediate operating requirements.
The quarter-over-prior year quarter increase in interest expense of $2.2 million was primarily attributable to a higher average interest rate on our revolving line of credit and term loan, and a higher average outstanding balance on our revolving line of credit during the quarter ended March 31, 2024.
The year-to-date period-over-period increase in interest expense of $3.6 million was primarily attributable to a higher average interest rate on our revolving line of credit and term loan, and a higher average outstanding balance on our revolving line of credit during the six months ended March 31, 2024.
Other Income, Net
Other income, net consists primarily of unrealized investment gains/losses and realized gains/losses on certain investments classified as trading securities, exchange rate gains/losses resulting from remeasurement of foreign-currency-denominated receivable and cash balances held by our various reporting entities into their respective functional currencies at period-end market rates, net of the impact of offsetting foreign currency forward contracts, and other non-operating items.
The quarter-over-prior year quarter increase in other income, net of $2.4 million was primarily attributable to an increase in net unrealized gains on investments classified as trading securities in our supplemental retirement and savings plan, and a decrease in foreign currency exchange losses.
The year-to-date period-over-period increase in other income, net of $5.4 million was primarily attributable to an increase in net realized and unrealized gains on investments classified as trading securities in our supplemental retirement and savings plan, and a decrease in foreign currency exchange losses.
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Provision for Income Taxes
The effective income tax rate was 24.9% and 26.1% during the quarters ended March 31, 2024 and 2023, respectively, and 17.3% and 22.0% during the six months ended March 31, 2024 and 2023, respectively. The provision for income taxes during interim quarterly reporting periods is based on our estimates of the effective tax rates for the full fiscal year. The effective tax rate in any quarter can also be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective tax rates for the quarter and six months ended March 31, 2024 were favorably impacted by the excess tax benefit relating to stock awards.
Operating Income
The following tables set forth certain summary information on a segment basis related to our operating income for the quarters and six-month periods ended March 31, 2024 and 2023.
 Quarter Ended March 31,Period-to-Period ChangePeriod-to-Period
Percentage Change
Segment20242023
 (In thousands)(In thousands) 
Scores$212,208 $175,405 $36,803 21 %
Software64,162 54,867 9,295 17 %
Unallocated corporate expenses(45,806)(43,183)(2,623)%
Total segment operating income230,564 187,089 43,475 23 %
Unallocated share-based compensation(35,448)(27,053)(8,395)31 %
Unallocated amortization expense(275)(275)— — %
Operating income$194,841 $159,761 35,080 22 %
ScoresSoftware
 Quarter Ended  
March 31,
Percentage of
Revenues
Quarter Ended  
March 31,
Percentage of
Revenues
 20242023202420232024202320242023
 (In thousands)  (In thousands)  
Segment revenues$236,885 $198,507 100 %100 %$196,924 $181,759 100 %100 %
Segment operating expense(24,677)(23,102)(10)%(12)%(132,762)(126,892)(67)%(70)%
Segment operating income$212,208 $175,405 90 %88 %$64,162 $54,867 33 %30 %
The quarter-over-prior year quarter increase in operating income of $35.1 million was attributable to a $53.5 million increase in segment revenues, partially offset by an $8.4 million increase in share-based compensation cost, a $7.4 million increase in segment operating expenses, and a $2.6 million increase in corporate expenses.
At the segment level, the quarter-over-prior year quarter increase in segment operating income of $43.5 million was the result of a $36.8 million increase in our Scores segment operating income and a $9.3 million increase in our Software segment operating income, partially offset by a $2.6 million increase in corporate expenses.
The quarter-over-prior year quarter increase in Scores segment operating income of $36.8 million was due to a $38.4 million increase in segment revenue, partially offset by a $1.6 million increase in segment operating expenses. Segment operating income as a percentage of segment revenue for Scores increased to 90% from 88%.
The quarter-over-prior year quarter increase in Software segment operating income of $9.3 million was due to a $15.1 million increase in segment revenue, partially offset by a $5.8 million increase in segment operating expenses. Segment operating income as a percentage of segment revenue for Software increased to 33% from 30%, primarily attributable to a decrease in sales of our lower-margin professional services and an increase in higher-margin license revenue recognized at a point in time.
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 Six Months Ended March 31,Period-to-Period ChangePeriod-to-Period
Percentage Change
Segment20242023
 (In thousands)(In thousands) 
Scores$380,862 $332,097 $48,765 15 %
Software119,284 100,632 18,652 19 %
Unallocated corporate expenses(86,374)(77,265)(9,109)12 %
Total segment operating income413,772 355,464 58,308 16 %
Unallocated share-based compensation(67,022)(56,755)(10,267)18 %
Unallocated amortization expense(550)(550)— — %
Unallocated gain on product line asset sale— 1,941 (1,941)(100)%
Operating income$346,200 $300,100 46,100 15 %
ScoresSoftware
 Six Months Ended  
March 31,
Percentage of
Revenues
Six Months Ended  
March 31,
Percentage of
Revenues
 20242023202420232024202320242023
 (In thousands)  (In thousands)  
Segment revenues$428,997 $376,495 100 %100 %$386,871 $348,641 100 %100 %
Segment operating expense(48,135)(44,398)(11)%(12)%(267,587)(248,009)(69)%(71)%
Segment operating income$380,862 $332,097 89 %88 %$119,284 $100,632 31 %29 %
The year-to-date period-over-period increase of $46.1 million in operating income was primarily attributable to a $90.7 million increase in segment revenues, partially offset by a $23.3 million increase in segment operating expenses, a $10.3 million increase in share-based compensation cost, and a $9.1 million increase in corporate expenses.
At the segment level, the year-to-date period-over-period increase of $58.3 million in segment operating income was the result of a $48.8 million increase in our Scores segment operating income and an $18.7 million increase in our Software segment operating income, partially offset by a $9.1 million increase in corporate expenses.
The year-to-date period-over-period $48.8 million increase in Scores segment operating income was attributable to a $52.5 million increase in segment revenue, partially offset by a $3.7 million increase in segment operating expenses. Segment operating income as a percentage of segment revenue for Scores increased to 89% from 88%.
The year-to-date period-over-period $18.7 million increase in Software segment operating income was attributable to a $38.2 million increase in segment revenue, partially offset by a $19.5 million increase in segment operating expenses. Segment operating income as a percentage of segment revenue for Software increased to 31% from 29%, primarily attributable to a decrease in sales of our lower-margin professional services and an increase in higher-margin license revenue recognized at a point in time.
CAPITAL RESOURCES AND LIQUIDITY
Outlook
As of March 31, 2024, we had $135.7 million in cash and cash equivalents, which included $109.5 million held by our foreign subsidiaries. We believe our cash and cash equivalents balances, including those held by our foreign subsidiaries, as well as available borrowings from our $600 million revolving line of credit and anticipated cash flows from operating activities, will be sufficient to fund our working and other capital requirements for at least the next 12 months and thereafter for the foreseeable future, including the $15.0 million principal payments on our term loan due over the next 12 months. Under our current financing arrangements, we have no other significant debt obligations maturing over the next 12 months. For jurisdictions outside the U.S. where cash may be repatriated in the future, the Company expects the net impact of any repatriations to be immaterial to the Company’s overall tax liability.
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In the normal course of business, we evaluate the merits of acquiring technology or businesses, or establishing strategic relationships with or investing in these businesses. We may elect to use available cash and cash equivalents to fund such activities in the future. In the event additional needs for cash arise, or if we refinance our existing debt, we may raise additional funds from a combination of sources, including the potential issuance of debt or equity securities. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to take advantage of unanticipated opportunities or respond to competitive pressures could be limited.
Summary of Cash Flows 
 Six Months Ended March 31,Period-to-Period Change
 20242023
 (In thousands)
Cash provided by (used in):
Operating activities$193,155 $182,244 $10,911 
Investing activities(12,040)(11,887)(153)
Financing activities(183,222)(173,245)(9,977)
Effect of exchange rate changes on cash996 7,457 (6,461)
Increase (decrease) in cash and cash equivalents$(1,111)$4,569 (5,680)
Cash Flows from Operating Activities
Our primary method for funding operations and growth has been through cash flows generated from operating activities. Net cash provided by operating activities increased to $193.2 million during the six months ended March 31, 2024 from $182.2 million during the six months ended March 31, 2023. The $10.9 million increase was attributable to a $51.7 million increase in net income and a $10.0 million increase in non-cash items, partially offset by a $50.8 million decrease due to the timing of receipts and payments in our ordinary course of business.
Cash Flows from Investing Activities
Net cash used in investing activities was $12.0 million for the six months ended March 31, 2024, compared with $11.9 million for the six months ended March 31, 2023.
Cash Flows from Financing Activities
Net cash used in financing activities increased to $183.2 million for the six months ended March 31, 2024 from $173.2 million for the six months ended March 31, 2023. The $10.0 million increase was primarily attributable to a $60.1 million increase in taxes paid related to net share settlement of equity awards and a $59.2 million increase in repurchases of common stock, partially offset by a $111.0 million increase in proceeds, net of payments, from our revolving line of credit and term loan.
Repurchases of Common Stock
In January 2024, our Board of Directors approved a new stock repurchase program replacing our previously authorized October 2022 stock repurchase program, which was terminated prior to its expiration. The current program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $500.0 million in the open market or in negotiated transactions. This program remains in effect until the total authorized amount is expended or until further action by our Board of Directors. As of March 31, 2024, we had $366.7 million remaining under our current stock repurchase program. We expended $179.5 million and $116.3 million during the quarters ended March 31, 2024 and 2023, respectively, and $251.3 million and $191.3 million during the six months ended March 31, 2024 and 2023, respectively, under our current and previously authorized stock repurchase programs.
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Revolving Line of Credit and Term Loan
We have a $600 million unsecured revolving line of credit and a $300 million unsecured term loan with a syndicate of banks that mature on August 19, 2026. Borrowings under the revolving line of credit and term loan can be used for working capital and general corporate purposes and may also be used for the refinancing of existing debt, acquisitions, and the repurchase of our common stock. The term loan requires principal payments in consecutive quarterly installments of $3.75 million on the last business day of each quarter. Interest rates on amounts borrowed under the revolving line of credit and term loan are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) one-month adjusted term Secured Overnight Financing Rate (“SOFR”) rate plus 1%, plus, in each case, an applicable margin, or (ii) an adjusted term SOFR rate plus an applicable margin. The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0% to 0.75% per annum and for SOFR borrowings ranges from 1% to 1.75% per annum. In addition, we must pay certain credit facility fees. The revolving line of credit and term loan contain certain restrictive covenants including a maximum consolidated leverage ratio of 3.5 to 1.0, subject to a step up to 4.0 to 1.0 following certain permitted acquisitions and subject to certain conditions, and a minimum interest coverage ratio of 3.0 to 1.0. The credit agreement also contains other covenants typical of unsecured credit facilities.
As of March 31, 2024, we had $488.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 6.673%, and $266.3 million in outstanding balance of the term loan at an interest rate of 6.674%. We were in compliance with all financial covenants under this credit agreement as of March 31, 2024.
Senior Notes
On May 8, 2018, we issued $400 million of senior notes in a private offering to qualified institutional investors (the “2018 Senior Notes”). The 2018 Senior Notes require interest payments semi-annually at a rate of 5.25% per annum and will mature on May 15, 2026. On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”). The 2019 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028. On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private offering to qualified institutional investors (the “2021 Senior Notes,” and collectively with the 2018 Senior Notes and the 2019 Senior Notes, the “Senior Notes”). The 2021 Senior Notes require interest payments semi-annually at a rate of 4.00% per annum and will mature on June 15, 2028, the same date as the 2019 Senior Notes. The indentures for the Senior Notes contain certain covenants typical of unsecured obligations. As of March 31, 2024, the carrying value of the Senior Notes was $1.3 billion and we were in compliance with all financial covenants under these obligations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our condensed consolidated financial statements in conformity with U.S. GAAP. These accounting principles require management to make certain judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. We periodically evaluate our estimates including those relating to revenue recognition, goodwill resulting from business combinations and other long-lived assets — impairment assessment, share-based compensation, income taxes, and contingencies and litigation. We base our estimates on historical experience and various other assumptions that we believe to be reasonable based on the specific circumstances, the results of which form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and such differences could be material to our financial condition and results of operations. Critical accounting estimates are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations.
You should carefully consider the critical accounting estimates disclosed in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (“Annual Report on Form 10-K”). There have been no significant changes from the critical accounting estimates disclosed in our Annual Report on Form 10-K.
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New Accounting Pronouncements
For information about recent accounting pronouncements recently adopted and not yet adopted and the impact on our consolidated financial statements, refer to Part I, Item 1, “Unaudited Financial Statements,” Note 1, “Nature of Business” in our accompanying Notes to Condensed Consolidated Financial Statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Market Risk Disclosures
We are exposed to market risk related to changes in interest rates and foreign exchange rates. We do not use derivative financial instruments for speculative or trading purposes.
Interest Rate
We maintain an investment portfolio consisting of bank deposits and money market funds. The funds provide daily liquidity and may be subject to interest rate risk and fall in value if market interest rates increase. We do not expect our operating results or cash flows to be affected to any significant degree by a sudden change in market interest rates. The following table presents the principal amounts and related weighted-average yields for our investments with interest rate risk at March 31, 2024 and September 30, 2023: 
 March 31, 2024September 30, 2023
Cost
Basis
Carrying
Amount
Average
Yield
Cost
Basis
Carrying
Amount
Average
Yield
 (Dollars in thousands)
Cash and cash equivalents$135,667 $135,667 3.20 %$136,778 $136,778 3.05 %
On May 8, 2018, we issued $400 million of senior notes in a private placement to qualified institutional investors (the “2018 Senior Notes”). On December 6, 2019, we issued $350 million of senior notes in a private offering to qualified institutional investors (the “2019 Senior Notes”). On December 17, 2021, we issued $550 million of additional senior notes of the same class as the 2019 Senior Notes in a private placement to qualified institutional investors (the “2021 Senior Notes” and collectively with the 2018 Senior Notes and 2019 Senior Notes, the “Senior Notes”). The fair value of the Senior Notes may increase or decrease due to various factors, including fluctuations in market interest rates and fluctuations in general economic conditions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Capital Resources and Liquidity” for additional information on the Senior Notes. The following table presents the face values and fair values for the Senior Notes at March 31, 2024 and September 30, 2023:
 March 31, 2024September 30, 2023
 Face ValueFair ValueFace ValueFair Value
 (In thousands)
The 2018 Senior Notes400,000 395,000 400,000 386,000 
The 2019 Senior Notes and the 2021 Senior Notes900,000 837,000 900,000 803,250 
       Total $1,300,000 $1,232,000 $1,300,000 $1,189,250 
We have interest rate risk with respect to our unsecured revolving line of credit and term loan. Interest rates on amounts borrowed under the revolving line of credit and term loan are based on (i) an adjusted base rate, which is the greatest of (a) the prime rate, (b) the Federal Funds rate plus 0.5%, and (c) one-month adjusted term SOFR rate plus 1%, plus, in each case, an applicable margin, or (ii) an adjusted term SOFR rate plus an applicable margin. The applicable margin for base rate borrowings and for SOFR borrowings is determined based on our consolidated leverage ratio. The applicable margin for base rate borrowings ranges from 0% to 0.75% per annum and for SOFR borrowings ranges from 1% to 1.75% per annum. A change in interest rates on this variable rate debt impacts the interest incurred and cash flows, but does not impact the fair value of the instrument. As of March 31, 2024, we had $488.0 million in borrowings outstanding under the revolving line of credit at a weighted-average interest rate of 6.673%, and $266.3 million in outstanding balance of the term loan at an interest rate of 6.674%.

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Foreign Currency Forward Contracts
We maintain a program to manage our foreign exchange rate risk on existing foreign-currency-denominated receivable and cash balances by entering into forward contracts to sell or buy foreign currencies. At period end, foreign-currency-denominated receivable and cash balances held by our various reporting entities are remeasured into their respective functional currencies at current market rates. The change in value from this remeasurement is then reported as a foreign exchange gain or loss for that period in our accompanying condensed consolidated statements of income and comprehensive income and the resulting gain or loss on the forward contract mitigates the foreign exchange rate risk of the associated assets. All of our foreign currency forward contracts have maturity periods of less than three months. Such derivative financial instruments are subject to market risk.
The following tables summarize our outstanding foreign currency forward contracts, by currency, at March 31, 2024 and September 30, 2023:
 March 31, 2024
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 9,000 $9,718 $— 
Buy foreign currency:
British pound (GBP)GBP 9,670 $12,200 $— 
Singapore dollar (SGD)SGD10,487 $7,800 $— 
 September 30, 2023
 Contract AmountFair Value
 Foreign
Currency
USDUSD
 (In thousands)
Sell foreign currency:
Euro (EUR)EUR 12,900 $13,621 $— 
Buy foreign currency:
British pound (GBP)GBP 10,700 $13,100 $— 
Singapore dollar (SGD)SGD8,569 $6,300 $— 
The foreign currency forward contracts were entered into on March 31, 2024 and September 30, 2023; therefore, their fair value was $0 on each of these dates.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation was carried out under the supervision and with the participation of FICO’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of FICO’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this quarterly report. Based on that evaluation, the CEO and CFO have concluded that FICO’s disclosure controls and procedures were effective as of March 31, 2024 to ensure that information required to be disclosed by FICO in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. In addition, the disclosure controls and procedures are designed to ensure that information required to be disclosed is accumulated and communicated to management, including the CEO and CFO, allowing timely decisions regarding required disclosure.
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Changes in Internal Control over Financial Reporting
No change in FICO’s internal control over financial reporting was identified in connection with the evaluation required by Rules 13a-15 or 15d-15 of the Exchange Act that occurred during the period covered by this quarterly report and that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended September 30, 2023 (our “Annual Report on Form 10-K”). The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be insignificant also may materially and adversely affect our business, financial condition or operating results in the future. There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities 
Period
Total
Number of
Shares
Purchased (1)
Average
Price Paid
per Share
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (2)
Maximum Dollar
Value of Shares
that May Yet Be
Purchased Under
the Plans or
Programs (2)
January 1, 2024 through January 31, 202442,512 $1,182.34 41,500 $496,990,469 
February 1, 2024 through February 29, 202450,154 $1,277.94 50,000 $433,093,756 
March 1, 2024 through March 31, 202452,830 $1,266.00 52,443 $366,691,341 
145,496 $1,245.67 143,943 $366,691,341 
(1)Includes 1,553 shares delivered in satisfaction of the tax withholding obligations resulting from the vesting of restricted stock units held by employees during the quarter ended March 31, 2024.
(2)In January 2024, our Board of Directors approved a new stock repurchase program replacing our previously authorized October 2022 stock repurchase program, which was terminated prior to its expiration. The current program is open-ended and authorizes repurchases of shares of our common stock from time to time up to an aggregate cost of $500.0 million in the open market or in negotiated transactions. This program remains in effect until the total authorized amount is expended or until further action by our Board of Directors.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Trading Arrangements
During the three months ended March 31, 2024, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
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Item 6. Exhibits 
Exhibit
Number
Description
3.1
3.2
31.1 *
31.2 *
32.1 *
32.2 *
101.INS *Inline XBRL Instance Document.
101.SCH *Inline XBRL Taxonomy Extension Schema Document.
101.CAL *Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
*Filed herewith.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FAIR ISAAC CORPORATION
DATE:April 25, 2024
By/s/ STEVEN P. WEBER
Steven P. Weber
Executive Vice President and Chief Financial Officer
(for Registrant as duly authorized officer and
as Principal Financial Officer)
DATE:April 25, 2024
By/s/ MICHAEL S. LEONARD
Michael S. Leonard
Vice President and Chief Accounting Officer
(Principal Accounting Officer)


34
Document
EXHIBIT 31.1

CERTIFICATIONS
I, William J. Lansing, certify that:
 
1.I have reviewed this quarterly report on Form 10-Q of Fair Isaac Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 25, 2024
/s/ WILLIAM J. LANSING
William J. Lansing
Chief Executive Officer

Document
EXHIBIT 31.2

CERTIFICATIONS

I, Steven P. Weber, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Fair Isaac Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: April 25, 2024
/s/ STEVEN P. WEBER
Steven P. Weber
Executive Vice President and Chief Financial Officer

Document
EXHIBIT 32.1


CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Fair Isaac Corporation.
 
Date:April 25, 2024/s/ WILLIAM J. LANSING
William J. Lansing
Chief Executive Officer

Document
EXHIBIT 32.2


CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that this periodic report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of Fair Isaac Corporation.
 
Date:April 25, 2024/s/ STEVEN P. WEBER
Steven P. Weber
Executive Vice President and Chief Financial Officer