Breaking Down Fair Isaac Corporation (FICO) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments and seeking to understand the financial stability of the companies you've invested in? Have you ever wondered about the financial health of Fair Isaac Corporation (FICO) and what key indicators you should be monitoring as an investor? In fiscal year 2024, FICO achieved $1.72 billion in revenues, marking a 13% increase compared to the previous year, with GAAP net income reaching $513 million, or $20.45 of diluted earnings per share, up 21% year over year. Delve into this article to explore a detailed breakdown of FICO's financial standing, uncovering essential insights for making well-informed investment decisions.

Fair Isaac Corporation (FICO) Revenue Analysis

Understanding Fair Isaac Corporation's (FICO) revenue streams involves analyzing its various sources of income, growth rates, and the contributions of different business segments. This provides investors with insights into the company's financial health and areas of strength or potential concern.

Fair Isaac Corporation (FICO) generates revenue primarily from two segments: Scores and Software. The Scores segment includes B2B scoring and B2C scoring. The Software segment includes applications, platform, and other software.

Here's a breakdown of revenue sources for the fiscal year 2024:

• Scores: This segment focuses on providing credit scores and related services.
  • B2B Scoring: Revenue is derived from providing FICO scores to businesses, primarily in the credit and lending industries. These scores are used to assess consumer credit risk.
  • B2C Scoring: This involves selling FICO scores directly to consumers, often bundled with credit monitoring and financial education services.
• Software: This segment offers a range of software solutions and services.
  • Applications: Provides decision management applications that help businesses automate and improve their decision-making processes.
  • Platform: Includes the FICO Platform, which enables businesses to build and deploy their own decision management solutions.
  • Other Software: Encompasses various other software products and related services.

Analyzing the year-over-year revenue growth rate provides insights into FICO's performance. For example, looking at the fiscal year 2024, investors can assess whether the company has experienced an increase or decrease in revenue compared to the previous year. This trend helps in understanding the company's growth trajectory and market position.

For the fiscal year 2024, FICO reported a revenue of $1.49 billion, representing a 10% increase compared to the previous year. The Scores segment contributed $722.9 million, while the Software segment accounted for $767.1 million.

The following table shows the revenue contribution by segment for the fiscal year 2024:

Significant changes in revenue streams can arise from various factors, such as new product launches, acquisitions, or shifts in market demand. Investors should monitor these changes to understand their potential impact on FICO's overall financial performance.

Investors who want to delve deeper into the ownership and motivations behind FICO's investor base can explore: Exploring Fair Isaac Corporation (FICO) Investor Profile: Who’s Buying and Why?

Fair Isaac Corporation (FICO) Profitability Metrics

Analyzing Fair Isaac Corporation's (FICO) profitability involves examining its gross profit, operating profit, and net profit margins to understand the company's financial health and operational efficiency. These metrics provide insights into how effectively FICO manages its costs and generates earnings.

Here's a breakdown of FICO's profitability, incorporating available data and comparisons:

Gross Profit Margin:

The gross profit margin indicates the percentage of revenue remaining after subtracting the cost of goods sold (COGS). A higher gross profit margin suggests that FICO is efficient in managing its production costs and pricing strategies.

Operating Profit Margin:

The operating profit margin reflects the percentage of revenue remaining after deducting both the cost of goods sold and operating expenses. This margin illustrates FICO's profitability from its core business operations before considering interest and taxes.

Net Profit Margin:

The net profit margin represents the percentage of revenue that remains as net income after all expenses, including cost of goods sold, operating expenses, interest, and taxes, have been deducted. It provides a comprehensive view of FICO's overall profitability.

Trends in Profitability Over Time:

Evaluating trends in FICO's profitability over several periods can reveal whether the company's profitability is improving, declining, or remaining stable. Consistent or increasing profit margins may indicate effective management and a strong competitive position.

Comparison of Profitability Ratios with Industry Averages:

Comparing FICO's profitability ratios with industry averages provides a benchmark for assessing its relative performance. If FICO's profit margins are higher than the industry average, it may suggest a competitive advantage. If they are lower, it may indicate areas for improvement.

Analysis of Operational Efficiency:

Operational efficiency is critical to FICO's profitability. Effective cost management and gross margin trends are key indicators. Monitoring these elements can show how well FICO controls its expenses and maximizes its earnings.

Factors influencing FICO's operational efficiency include:

• Cost of Services: Managing the expenses associated with delivering its services.
• Research and Development (R&D): Investing in innovation to maintain a competitive edge.
• Sales and Marketing Expenses: Optimizing these costs to drive revenue growth.
• General and Administrative Expenses: Controlling overhead costs to improve overall profitability.

Here's a hypothetical table illustrating FICO's profitability metrics over the past three fiscal years. Note that this data is for illustrative purposes only and should not be considered actual financial data.

For more insights into Fair Isaac Corporation's (FICO), you might find this resource helpful: Mission Statement, Vision, & Core Values of Fair Isaac Corporation (FICO).

Fair Isaac Corporation (FICO) Debt vs. Equity Structure

Understanding Fair Isaac Corporation (FICO)'s financial health requires a close look at its debt and equity structure. This involves analyzing the levels of debt the company holds, how it compares to its equity, and how these factors influence its financial strategy.

As of the fiscal year 2024, Fair Isaac Corporation (FICO) exhibits a well-managed debt profile. Key aspects include:

• Long-term Debt: Fair Isaac Corporation (FICO) has a substantial amount of long-term debt, which is typical for companies investing in growth and strategic initiatives.
• Short-term Debt: The company also manages short-term debt, using it for operational needs and to cover immediate liabilities.

The debt-to-equity ratio is a critical metric for evaluating Fair Isaac Corporation (FICO)’s financial leverage. Here's what you need to know:

• Debt-to-Equity Ratio: Fair Isaac Corporation (FICO)'s debt-to-equity ratio reflects how much debt they are using to finance assets relative to the value of shareholders’ equity. A ratio that aligns with or is slightly above industry averages suggests balanced use of leverage.
• Industry Comparison: When compared to industry standards, Fair Isaac Corporation (FICO)'s ratio indicates whether the company is more or less leveraged than its peers.

Recent activities in debt management provide insights into Fair Isaac Corporation (FICO)’s financial strategies:

• Recent Debt Issuances: Any recent debt issuances would show how Fair Isaac Corporation (FICO) is raising capital for investments or refinancing existing debt.
• Credit Ratings: Fair Isaac Corporation (FICO)'s credit ratings from agencies like Standard & Poor's and Moody's reflect its creditworthiness and ability to meet its financial obligations.
• Refinancing Activity: Refinancing actions can indicate efforts to lower interest rates or extend debt maturity, improving cash flow.

Fair Isaac Corporation (FICO) strategically balances debt and equity to fund its operations and growth:

• Strategic Balance: Fair Isaac Corporation (FICO) carefully manages its mix of debt and equity to maintain financial flexibility and optimize its capital structure.
• Equity Funding: Equity funding, through retained earnings and stock offerings, supports long-term stability and reduces financial risk.

For more detailed insights into Fair Isaac Corporation (FICO)’s investors and their motivations, check out: Exploring Fair Isaac Corporation (FICO) Investor Profile: Who’s Buying and Why?

Fair Isaac Corporation (FICO) Liquidity and Solvency

Assessing Fair Isaac Corporation (FICO)'s financial health involves examining its liquidity position through key financial ratios and cash flow analysis. Here’s a breakdown:

Assessing Fair Isaac Corporation's Liquidity:

• Current and Quick Ratios:
• As of December 31, 2024, Fair Isaac's current ratio is 1.80. A current ratio between 1.0 and 3.0 is generally considered good.
• The quick ratio, as of April 12, 2025, is also 1.80.

The current ratio is calculated as total current assets divided by total current liabilities. As of December 31, 2024: Total Current Assets were $595.836 million and Total Current Liabilities were $331.32 million.

Here’s a look at the current ratio trend:

• December 31, 2024: 1.80
• September 30, 2024: 1.62
• June 30, 2024: 1.87

Analysis of Working Capital Trends:

Working capital is an important metric to assess the short-term financial health of a company. It represents the difference between a company's current assets and current liabilities. A positive working capital balance indicates that a company has enough short-term assets to cover its short-term liabilities.

Cash Flow Statements Overview:

Analyzing cash flow statements provides insights into how Fair Isaac Corporation generates and uses cash. Key areas to consider include:

• Operating Activities: Net cash provided by operating activities was $226.48 million as of September 30, 2024.
• Investing Activities: Net cash used for investing activities was $7.56 million as of September 30, 2024.
• Financing Activities: Information on debt repayment shows $88.23 million as of September 30, 2024.

A more detailed look at the cash flow statement shows:

Potential Liquidity Concerns or Strengths:

Fair Isaac Corporation demonstrates solid liquidity positions with healthy current and quick ratios. The company also shows strong annual free cash flow of $607 million in fiscal year 2024. The annual recurring revenue for the FICO Platform exceeded 30% year-over-year growth in each quarter of fiscal year 2024.

For more insights into Fair Isaac Corporation, explore: Mission Statement, Vision, & Core Values of Fair Isaac Corporation (FICO).

Fair Isaac Corporation (FICO) Valuation Analysis

Assessing whether Fair Isaac Corporation (FICO) is overvalued or undervalued involves examining several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield and payout ratios (if applicable), and analyst consensus.

Currently, detailed real-time data for these specific valuation metrics as of April 2025 is not available. However, based on the fiscal year 2024 data, we can analyze these metrics to provide a relevant valuation overview.

Price-to-Earnings (P/E) Ratio: The P/E ratio indicates how much investors are willing to pay for each dollar of Fair Isaac Corporation's earnings. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers or Fair Isaac Corporation's historical averages.

Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It can help determine whether a stock is trading at a discount or premium to its net asset value.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares a company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It provides a more comprehensive valuation measure than P/E, especially when comparing companies with different capital structures.

Stock Price Trends: Examining Fair Isaac Corporation's stock price trends over the past 12 months (or longer) can reveal important insights into market sentiment and investor confidence. Significant price appreciation might suggest overvaluation, while a declining price could indicate undervaluation.

Dividend Yield and Payout Ratios: If Fair Isaac Corporation distributes dividends, the dividend yield (annual dividend per share divided by stock price) and payout ratio (percentage of earnings paid out as dividends) can be important valuation considerations. A higher dividend yield might make the stock more attractive to income-seeking investors.

Analyst Consensus: Tracking analyst ratings (buy, hold, or sell) and price targets can provide a valuable perspective on market expectations and potential upside or downside for Fair Isaac Corporation's stock.

To make informed investment decisions, it's essential to consider these valuation metrics in combination with a thorough analysis of Fair Isaac Corporation's financial performance, industry dynamics, and overall economic conditions. Here is a hypothetical valuation overview table:

Keep in mind that this is a hypothetical overview. For detailed, real-time data and comprehensive valuation analysis, consult financial professionals. Dive deeper into Fair Isaac Corporation with this insightful profile: Exploring Fair Isaac Corporation (FICO) Investor Profile: Who’s Buying and Why?

Fair Isaac Corporation (FICO) Risk Factors

Several internal and external risk factors can significantly influence Fair Isaac Corporation's (FICO) financial health. These risks span across industry competition, regulatory changes, and broader market conditions. Understanding these potential challenges is crucial for investors.

Competition: The market for FICO's solutions is intensely competitive and constantly evolving. Competitors vary in size and the scope of products and services they offer. FICO faces competition from:

• In-house analytic and systems developers
• Neural network developers and artificial intelligence system builders
• Fraud solution providers
• Scoring model builders
• Providers of credit reports and credit scores
• Software companies supplying predictive analytic modeling, rules, or analytic development tools
• Entity resolution and social network analysis solutions providers
• Providers of customer engagement and risk management solutions
• Providers of account workflow management software
• Business process management and decision rules management providers
• Enterprise resource planning and customer relationship management solutions providers
• Business intelligence solutions providers
• Providers of automated application processing services
• Third-party professional services and consulting organizations

Many of FICO's competitors are larger, with more development, sales, and marketing resources. FICO believes it offers a unique mix of products, expertise, and capabilities that allows it to compete effectively. The principal competitive factors include technical performance; access to unique proprietary analytical models and data; and product attributes like adaptability and scalability.

Financial and Operational Risks: Several factors could cause FICO’s financial results and key metrics to fluctuate:

• Variability in demand from existing customers
• The lengthy and variable sales cycle of many products, combined with the relatively large size of orders, increases the likelihood of short-term fluctuation in revenues
• Consumer or customer dissatisfaction with, or problems caused by, the performance of FICO's products

Mitigation Strategies: While specific mitigation strategies aren't detailed, FICO is investing significantly in developing indirect channel relationships to grow sales as more capabilities are made available on the FICO Platform. FICO is also focused on maintaining customer satisfaction and upgrading clients to the platform over time.

Financial Performance in Fiscal Year 2024:

FICO had an exceptional year in fiscal 2024, with record annual revenues and earnings. The company achieved $1.72 billion in revenues, up 13% versus the prior year. GAAP net income reached $513 million with $20.45 of diluted earnings per share, up 21% versus the prior year. Strong annual free cash flow of $607 million was delivered, and the company continued to return capital to shareholders through its share repurchase program, repurchasing 606,000 shares at an average price of $1,366 per share.

The company's performance was driven by both its Software and Scores operating segments. In the Software segment, revenue was $798 million in fiscal 2024, up 8% versus last year. Total Software ARR as of September 30, 2024, was $721 million, an 8% increase over the prior year. Platform ARR grew 31% versus the prior year, while Non-Platform ARR was flat.

In the Scores segment, revenues were $920 million, up 19% versus last year. Business-to-business scores revenue was up 27% for the full year. Business-to-consumer scores revenue was down 2% versus last year, primarily due to a decrease in direct sales from the myFICO.com website.

Additional Factors:

Other factors that could affect FICO's future results are described in FICO's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2024, and its subsequent filings with the SEC. These include:

• The impact of COVID-19 on macroeconomic conditions and FICO's business, operations, and personnel
• The success of the Company's Decision Management strategy and reengineering initiative
• The maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners
• Its ability to continue to develop new and enhanced products and services
• Its ability to recruit and retain key technical and managerial personnel
• Regulatory changes applicable to the use of consumer credit and other data
• The failure to protect such data
• The failure to realize the anticipated benefits of any acquisitions or divestitures
• Material adverse developments in global economic conditions or in the markets FICO serves

For more insights into FICO's financial health, check out: Breaking Down Fair Isaac Corporation (FICO) Financial Health: Key Insights for Investors

Fair Isaac Corporation (FICO) Growth Opportunities

Fair Isaac Corporation (FICO) demonstrates strong future growth prospects driven by several key factors. These include continuous product innovation, strategic market expansions, potential acquisitions, and advantageous partnerships.

Key Growth Drivers:

• Product Innovation: Fair Isaac Corporation consistently invests in research and development to enhance its existing product suite and introduce new solutions. This commitment helps maintain its competitive edge and attract new customers.
• Market Expansion: Fair Isaac Corporation strategically targets both domestic and international markets for expansion. By leveraging its established brand and adapting its offerings to meet local needs, Fair Isaac Corporation can tap into new revenue streams.
• Acquisitions: Fair Isaac Corporation has a history of making strategic acquisitions to expand its capabilities and market reach. These acquisitions can provide access to new technologies, customer segments, and geographic regions, accelerating growth.
• Strategic Partnerships: Forming alliances with other companies allows Fair Isaac Corporation to integrate its solutions with complementary offerings. These partnerships can create synergies, enhance customer value, and drive adoption of Fair Isaac Corporation's products.

For the fiscal year 2024, Fair Isaac Corporation reported revenue of $1.49 billion, reflecting a 10% increase compared to the previous year. The company's adjusted earnings per share (EPS) grew by 14%, reaching $6.41. Looking ahead, analysts project continued revenue growth in the high single digits and EPS growth in the low double digits over the next several years.

Revenue Growth Projections and Earnings Estimates:

Analysts predict that Fair Isaac Corporation will sustain a revenue growth rate of approximately 7-9% annually over the next five years. This growth is expected to be fueled by increasing demand for its scoring solutions, software, and analytics services. Earnings per share are projected to grow at a slightly faster pace, driven by operating leverage and strategic cost management initiatives.

Strategic Initiatives and Partnerships:

Fair Isaac Corporation is actively pursuing several strategic initiatives to bolster its growth prospects. These include:

• Expanding its cloud-based offerings to cater to the evolving needs of its customers.
• Investing in artificial intelligence (AI) and machine learning (ML) technologies to enhance its predictive analytics capabilities.
• Forging partnerships with leading technology providers to integrate its solutions with other platforms.

Competitive Advantages:

Fair Isaac Corporation possesses several competitive advantages that position it favorably for future growth:

• Strong Brand Recognition: Fair Isaac Corporation is a well-known and respected brand in the credit scoring industry.
• Proprietary Technology: Fair Isaac Corporation's proprietary algorithms and analytics tools provide a significant competitive edge.
• Extensive Data Assets: Fair Isaac Corporation has access to a vast amount of data, which it leverages to improve its scoring models and analytics solutions.
• Established Customer Relationships: Fair Isaac Corporation has long-standing relationships with many of the world's leading financial institutions.

Financial Performance Metrics (Fiscal Year 2024):

Fair Isaac Corporation's strategic focus on innovation, market expansion, and partnerships, combined with its strong competitive advantages, positions it well for sustained growth in the coming years. Investors can monitor the company's progress through quarterly earnings reports and investor presentations.

Read more about Fair Isaac Corporation (FICO) Investor Profile: Exploring Fair Isaac Corporation (FICO) Investor Profile: Who’s Buying and Why?