$FICO CEO Will Lansing on the possibility of $UPST replacing them.

"It doesn't make sense to compare Upstart originations to a FICO Score. It makes sense to compare Upstart originations to FICO origination software because that would be a valid comparison."
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$FICO Crushed Another Quarter
$FICO reported earnings yesterday and they had a clean beat and raise on both the top and bottom line. FICO has had a streak of impressive quarters and this one was no exception.

Despite the mortgage origination headwinds, FICO was able to grow its scores segment due to pricing power and growth in other segments.

The story around Fico being disrupted remains a fairy tale. They have not had a single defection and no threats of major customers leaving.

There has been no update regarding the FHFA ruling. Regardless, I don’t think a poor ruling will have a material impact on their moat.

Software growth remains very strong with revenues up 19% adjusting for divestitures. Platform revenue ARR growth (where they are transitioning too) was up 60% YoY and Platform DBNRR was 141%. As a standalone business, what would be their P/S multiple?

This impressive ARR growth does not include the big contract that they signed at the end of the quarter. This should bump their Platform ARR growth next quarter.

Fico continues their strategy of taking private, publicly. They bought back over 2% of
their float and authorized another buyback. They’re levering up, and continuously hammering their share count.

Overall, an extremely impressive quarter from $FICO. Tomorrow, I will release my Earnings review on $VLY.
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$FB Earnings Review
$FB reported earnings yesterday and popped 15% as of this writing. I believe the jump was warranted on the increased user engagement. The market is confident that the macro issues will eventually subside, but were reassured about competition.

Meta’s family DAP increased 6% YoY. Even more reassuring, their family DAP/MAP ratio remained constant at 79% suggesting stronger engagement. Also, Meta’s total impressions increased 15% YoY, suggesting people are spending more time on Meta.

In terms of Facebook blue, UCAN DAUs ticked up and total DAU’s were up 4% YoY. More importantly, the DAU/MAU ratio ticked up to 67% suggesting stronger engagement as well.

Zuck’s comments during the earnings call further point to increased engagement and the increasing popularity of reels.

Revenue was up 10% after accounting for foreign exchange changes and the guide was light. Monetization was not as strong as many analysts hoped for, but this seems like a short-term headwind that the street is more than willing to look past.

Zuckerberg seemed unconcerned about the monetization of Reels. He reminded investors that Facebook has a blueprint for it and they will be able to monetize as long as the engagement is high. If Zuckerberg is unconcerned, so am I.

In terms of capital allocation, Meta bought back $9bn of stock, but I was slightly disappointed management did not hammer the buyback at lower prices. Even so, the buyback is still significant and they have almost $30bn remaining.

Zuckerberg also appears to be listening to the street that they are not thrilled with the metaverse spend. He dropped the expenses estimates by $3bn. Even at the lower level, if Facebook loses the battle for the metaverse, it will not be because of a lack of capital deployed.

Overall, I thought it was a great quarter. I will be releasing $FICO report later today and hopefully $VLY tomorrow.
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Writing something up myself too, pretty shocked that Zuck told investors what they wanted to hear this quarter, lol.
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Tomorrow Earnings Prep
Tomorrow, $FB and $FICO will be reporting after the bell. For anyone looking to get up to speed on either company, I have linked below my write-ups for the two companies. The $FB model is outdated, but the $FICO model is still relevant.

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