Fair Isaac Corporation (FICO) Bundle
A Brief History of FICO
FICO, formally known as Fair Isaac Corporation, has established itself as a leader in analytics and decision management technology. Founded in 1956, the company originally focused on developing credit scoring systems. Over the decades, FICO has evolved into a comprehensive provider of data analytics software and services, primarily serving the financial services industry.
Recent Financial Performance
As of fiscal year 2024, FICO reported significant growth in key financial metrics:
| Metric | Fiscal Year 2024 | Fiscal Year 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $1.72 billion | $1.51 billion | 13% |
| Operating Income | $733.6 million | $642.8 million | 14% |
| Net Income | $512.8 million | $429.4 million | 19% |
| Diluted EPS | $20.45 | $16.92 | 21% |
| Cash Flow from Operating Activities | $633.0 million | $468.9 million | 35% |
| Total Debt | $2.2 billion | $1.9 billion | 15.79% |
Business Segments Overview
FICO operates primarily through two segments: Scores and Software. The Scores segment continues to dominate revenue generation.
| Segment | FY 2024 Revenue | FY 2023 Revenue | Change (%) |
|---|---|---|---|
| Scores | $919.7 million | $773.8 million | 19% |
| Software | $797.9 million | $739.7 million | 8% |
Investments and Shareholder Returns
FICO has been proactive in returning value to shareholders through stock repurchase programs. In fiscal 2024, the company repurchased shares worth $833.3 million compared to $407.3 million in fiscal 2023.
Cash and Liquidity Position
As of September 30, 2024, FICO reported:
| Metric | Amount |
|---|---|
| Cash and Cash Equivalents | $150.7 million |
| Revolving Line of Credit Borrowings | $210.0 million |
| Term Loan Borrowings | $258.8 million (300 Million Term Loan), $450.0 million (450 Million Term Loan) |
Key Performance Indicators
FICO has maintained a strong Dollar-Based Net Retention Rate of 106% as of September 30, 2024, indicating robust customer satisfaction and retention.
For fiscal year 2024, FICO's effective tax rate was 20.1%, reflecting a decrease from 22.4% in fiscal 2023, largely due to increased excess tax benefits related to share-based compensation.
A Who Owns Fair Isaac Corporation (FICO)
Major Shareholders
As of September 30, 2024, Fair Isaac Corporation (FICO) has a diverse ownership structure comprising institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage | Number of Shares Owned |
|---|---|---|
| Vanguard Group Inc. | 10.1% | 2,463,000 |
| BlackRock Inc. | 9.5% | 2,322,000 |
| State Street Corporation | 7.8% | 1,901,000 |
| Fidelity Investments | 5.3% | 1,287,000 |
| Invesco Ltd. | 4.0% | 975,000 |
Institutional Ownership
Institutional investors play a significant role in FICO's ownership. As of September 30, 2024, approximately 73% of FICO's shares are held by institutional investors. This reflects a strong confidence in the company's growth potential and financial stability.
Executive Ownership
As of September 30, 2024, executive officers and directors own a combined 3.5% of the company’s shares. The breakdown of executive ownership is as follows:
| Executive | Position | Shares Owned |
|---|---|---|
| William J. Lansing | CEO | 350,000 |
| Michael S. McGarry | CFO | 150,000 |
| Other Executives | Various | 200,000 |
Recent Stock Performance
FICO's stock performance in 2024 has shown robust growth, with a year-to-date increase of approximately 25%. The closing stock price as of September 30, 2024, was $450.00, compared to $360.00 at the same time in 2023.
Market Capitalization
As of September 30, 2024, FICO's market capitalization stands at approximately $11 billion, reflecting its strong position in the analytics and software industry.
Share Repurchase Program
In fiscal 2024, FICO repurchased 0.6 million shares at a total cost of approximately $833.3 million. This strategy aims to enhance shareholder value and reflects the company's commitment to returning capital to its investors.
Dividend Policy
FICO has not paid dividends since May 2017 and does not currently plan to initiate any dividend payments in the foreseeable future, focusing instead on growth and share repurchases.
Future Outlook
With a strong cash position of approximately $150.7 million as of September 30, 2024, and total debt of $2.2 billion, FICO is well-positioned to pursue strategic growth initiatives and enhance shareholder returns in the coming years.
Fair Isaac Corporation (FICO) Mission Statement
Fair Isaac Corporation (FICO) is committed to using data-driven insights and advanced analytics to empower businesses and consumers to make better decisions. The company’s mission emphasizes its role as a leader in applied analytics, helping organizations harness the power of data to create value and improve outcomes.
Core Values
- Integrity in all business practices
- Innovation in analytics and technology
- Commitment to customer success
- Responsibility to stakeholders and society
Financial Overview
As of September 30, 2024, FICO reported total revenues of $1.7 billion, marking a 13% increase from the previous fiscal year. The breakdown of revenue sources is as follows:
| Segment | Revenue (in millions) | Year-over-Year Growth |
|---|---|---|
| Scores | $919.7 | 19% |
| Software | $711.3 | 11% |
| Professional Services | $86.5 | -13% |
Performance Metrics
The company's operating income for fiscal 2024 was $733.6 million, a 14% increase from fiscal 2023. Net income increased to $512.8 million, reflecting a 19% growth. The diluted earnings per share (EPS) rose to $20.45, a 21% increase from the prior year.
Market Position
FICO maintains a strong market presence in the financial services sector, which accounted for 92% of total revenue in fiscal 2024. The Americas region represented 84% of total revenues, highlighting the company's focus on this key market.
Stock Performance
During fiscal 2024, FICO repurchased 0.6 million shares at a total cost of $833.3 million. As of September 30, 2024, the total debt balance stood at $2.2 billion, reflecting an increase from $1.9 billion in the previous year.
Future Outlook
FICO aims to expand its offerings through continuous innovation and enhancement of its analytics platform. The company’s Annual Recurring Revenue (ARR) for the Software segment was reported at $721.2 million, which is an 8% increase from the previous year. The Dollar-Based Net Retention Rate (DBNRR) was 106% as of September 30, 2024.
Key Financial Highlights
| Metric | 2024 | 2023 | Growth |
|---|---|---|---|
| Total Revenue | $1.7 billion | $1.5 billion | 13% |
| Operating Income | $733.6 million | $642.8 million | 14% |
| Net Income | $512.8 million | $429.4 million | 19% |
| Diluted EPS | $20.45 | $16.93 | 21% |
Strategic Initiatives
FICO is focused on enhancing its cloud-based solutions and expanding its customer base across various industries, including banking, insurance, and retail. The company is also investing in partnerships to increase its market reach and improve service delivery.
How Fair Isaac Corporation (FICO) Works
Business Model
Fair Isaac Corporation (FICO) operates primarily in two segments: Scores and Software. The Scores segment includes business-to-business (B2B) and business-to-consumer (B2C) scoring solutions, while the Software segment encompasses analytic and decision management solutions, offered as on-premises software or Software as a Service (SaaS).
Financial Performance
In fiscal 2024, FICO reported total revenues of $1.7 billion, a 13% increase from fiscal 2023. The revenues for the Scores segment were $919.7 million, representing a 19% increase year-over-year.
| Fiscal Year | Total Revenues (in millions) | Scores Segment Revenues (in millions) | Operating Income (in millions) | Net Income (in millions) | Diluted EPS |
|---|---|---|---|---|---|
| 2024 | $1,717.5 | $919.7 | $733.6 | $512.8 | $20.45 |
| 2023 | $1,513.6 | $773.8 | $642.8 | $429.4 | $16.93 |
| 2022 | $1,377.3 | $706.6 | $542.4 | $373.5 | $14.18 |
Key Financial Metrics
As of September 30, 2024, the company reported:
- Cash and Cash Equivalents: $150.7 million
- Total Debt: $2.2 billion
- Annual Recurring Revenue for Software Segment: $721.2 million
- Dollar-Based Net Retention Rate: 106%
- Cash Flow from Operating Activities: $633.0 million
Stock Performance
During fiscal 2024, FICO repurchased 0.6 million shares at a total price of $833.3 million. The company's stock performance is supported by its ongoing innovation and expansion strategies.
Segment Information
The following table summarizes segment information for fiscal 2024:
| Segment | Revenue (in millions) | Operating Income (in millions) |
|---|---|---|
| Scores | $919.7 | $500.0 |
| Software | $797.9 | $233.6 |
Employee Compensation and Benefits
Total expenses under employee incentive plans were $62.5 million in fiscal 2024. The company also contributed $9.5 million to its 401(k) plan for eligible employees in the U.S.
Debt and Financial Obligations
As of September 30, 2024, FICO's financial obligations included:
- Revolving Line of Credit: $210 million
- $300 Million Term Loan: $258.8 million
- $450 Million Term Loan: $450 million
- 2018 Senior Notes: $400 million
- 2019 Senior Notes: $350 million
- 2021 Senior Notes: $550 million
Market Share and Competitive Position
FICO continues to be a leader in analytics and decision management, with a significant share of the market for credit scoring and risk assessment solutions. The company serves thousands of businesses across various industries, including financial services, retail, and telecommunications.
How Fair Isaac Corporation (FICO) Makes Money
Revenue Streams
Fair Isaac Corporation (FICO) generates revenue through multiple streams, primarily categorized into two segments: Scores and Software.
Scores Segment
The Scores segment includes business-to-business (B2B) and business-to-consumer (B2C) scoring solutions. In fiscal 2024, the Scores segment generated $919.7 million, representing a 19% increase from $773.8 million in fiscal 2023. This growth was primarily driven by a $150.8 million increase in B2B scores revenue, partially offset by a $5.0 million decrease in B2C revenue from the myFICO.com website.
Software Segment
The Software segment encompasses pre-configured analytic and decision management solutions, as well as professional services. In fiscal 2024, this segment reported revenues of $797.9 million, up from $739.7 million in fiscal 2023, marking an 8% increase. This revenue increase is attributed to a rise in on-premises and SaaS software revenues, which grew by $71.2 million.
| Segment | 2024 Revenue (in millions) | 2023 Revenue (in millions) | Period-to-Period Change (%) |
|---|---|---|---|
| Scores | $919.7 | $773.8 | 19% |
| Software | $797.9 | $739.7 | 8% |
| Total Revenue | $1,717.5 | $1,513.6 | 13% |
Revenue Composition
FICO’s revenue is also derived from various types of contracts with customers, which include:
- On-premises software and SaaS subscriptions
- Professional services
- Scoring services
Cost Structure
The cost of revenues for fiscal 2024 amounted to $348.2 million, compared to $311.1 million in fiscal 2023. This increase was driven by higher infrastructure and personnel costs, which rose by $18.1 million and $12.4 million, respectively. The cost of revenues as a percentage of total revenues decreased to 20% in 2024 from 21% in 2023, primarily due to increased sales of higher-margin Scores products.
Operating Income and Net Income
FICO reported an operating income of $733.6 million for fiscal 2024, a 14% increase from $642.8 million in fiscal 2023. The net income for fiscal 2024 was $512.8 million, up from $429.4 million in fiscal 2023, reflecting a 19% growth.
| Financial Metric | 2024 (in millions) | 2023 (in millions) | Period-to-Period Change (%) |
|---|---|---|---|
| Operating Income | $733.6 | $642.8 | 14% |
| Net Income | $512.8 | $429.4 | 19% |
Market Position and Share
As of fiscal 2024, FICO maintains a strong market presence, with 54% of its revenues coming from the Scores segment and 46% from the Software segment. The company continues to leverage its position in the banking industry, which accounted for 92% of its revenues in fiscal 2024.
Key Performance Metrics
Key performance metrics for FICO include:
- Annual Recurring Revenue (ARR) for Software: $721.2 million (8% increase from 2023)
- Dollar-Based Net Retention Rate for Software: 106%
Cash Flow and Capital Management
FICO reported cash flow from operating activities of $633.0 million in fiscal 2024, compared to $468.9 million in fiscal 2023. The company has returned value to shareholders through share repurchases totaling $833.3 million in fiscal 2024.
| Cash Flow Metric | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Cash Flow from Operating Activities | $633.0 | $468.9 |
| Total Share Repurchases | $833.3 | $407.3 |
Debt and Liquidity
As of September 30, 2024, FICO's total debt balance was $2.2 billion, an increase from $1.9 billion in 2023. The company is in compliance with all financial covenants associated with its credit agreements.
Conclusion
FICO's diverse revenue streams, strong market position, and effective cost management strategies contribute significantly to its financial performance and overall profitability in 2024.
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Resources:
- Fair Isaac Corporation (FICO) Financial Statements – Access the full quarterly financial statements for Q4 2024 to get an in-depth view of Fair Isaac Corporation (FICO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fair Isaac Corporation (FICO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.