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Fair Isaac Corporation (FICO)
NYSE:FICO
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Fair Isaac
(NYSE:FICO)
66Neutral
Positive Factors
Market Position
FICO's dominant market position and product offering as a leading risk management tool for financial institutions adds a defensive aspect that should perform well in an economic slowdown.
Stock Repurchase
FICO is expected to continue to repurchase stock at or potentially faster than historical levels, which could result in an upward bias to estimates.
Negative Factors
Regulatory Challenges
U.S. policymakers have criticized FICO’s price increases, and forthcoming regulatory changes could create a competitive opportunity for a challenger scoring system.
Valuation Concerns
FICO stock carries an expensive valuation that embeds high growth expectations despite meaningful execution risk.
Fair Isaac (FICO) vs. S&P 500 (SPY)
Market Cap
$46.11B
Dividend YieldN/A
Average Volume (3M)195.38K
Price to Earnings (P/E)86.7
Beta (1Y)1.28
Revenue Growth14.49%
EPS Growth21.85%
CountryUS
Employees3,604
SectorTechnology
Sector Strength57
IndustrySoftware - Application
Share Statistics
EPS (TTM)5.79
Shares Outstanding24,418,139
10 Day Avg. Volume216,363
30 Day Avg. Volume195,383
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)25.49
Price to Cash Flow (P/CF)58.30
P/FCF Ratio52.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2,220.09Price Target Upside13.72% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
Fair Isaac Business Overview & Revenue Model
Company DescriptionFair Isaac Corporation develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through two segments, Scores and Software. The Software segment offers pre-configured decision management solution designed for various business problems or processes, such as marketing, account origination, customer management, customer engagement, fraud detection, financial crimes compliance, collection, and marketing, as well as associated professional services. This segment also provides 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 customers to address a wide range of business use cases. The Scores segment provides business-to-business scoring solutions and services for consumers that give clients access to analytics to be integrated into their transaction streams and decision-making processes, as well as business-to-consumer scoring solutions comprising myFICO.com subscription offerings. Fair Isaac Corporation markets its products and services primarily through its direct sales organization and indirect channels, as well as online. The company was formerly known as Fair Isaac & Company, Inc. and changed its name to Fair Isaac Corporation in July 1992. Fair Isaac Corporation was founded in 1956 and is headquartered in Bozeman, Montana.
How the Company Makes MoneyFICO generates revenue through a combination of software sales, professional services, and credit scoring services. A significant portion of its income comes from licensing its analytics software and tools to financial institutions, which use these products for decision management and risk assessment. FICO also earns revenue from consulting services, helping businesses implement and optimize its technology solutions. Additionally, the company receives revenue from its credit scoring services, which are used by lenders and consumers alike to evaluate creditworthiness. FICO's strategic partnerships with banks, credit card companies, and other financial institutions further bolster its earnings by facilitating widespread adoption of its scoring models and analytics services.
Fair Isaac Financial Statement Overview
Summary
Fair Isaac shows strong profitability and cash flow generation. However, the company faces significant risks due to its high leverage and negative equity position. Despite stable revenue and profit margins, financial stability is a concern.Income Statement
Fair Isaac demonstrates strong profitability metrics with a Gross Profit Margin of 80.1% and a Net Profit Margin of 30.7% for TTM, indicating high efficiency in converting revenue to profit. The company's Revenue Growth Rate is 3.4%, showing moderate growth. Both EBIT and EBITDA Margins are robust at 42.9% and 44.1%, respectively, reflecting effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet presents a challenging picture with a negative Stockholders' Equity of $1.14 billion, resulting in a negative Equity Ratio and a high Debt-to-Equity Ratio, which indicates significant financial leverage. This high level of debt compared to equity could pose a risk in economic downturns. Return on Equity is not applicable due to negative equity.40
Negative
Cash Flow
The cash flow statement shows strong cash generation with a Free Cash Flow of $679.8 million, indicating solid liquidity. The Operating Cash Flow to Net Income Ratio is 1.3, signifying efficient cash conversion from earnings. The Free Cash Flow Growth Rate is 8.9%, pointing to positive momentum in cash generation.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.78B | 1.72B | 1.51B | 1.38B | 1.32B | 1.29B | Gross Profit |
| 1.42B | 1.37B | 1.20B | 1.08B | 984.07M | 933.42M | EBIT |
| 761.80M | 733.63M | 642.83M | 542.41M | 321.13M | 295.97M | EBITDA |
| 783.44M | 761.49M | 663.81M | 576.66M | 554.93M | 349.56M | Net Income Common Stockholders |
| 544.27M | 512.81M | 429.38M | 373.54M | 392.08M | 236.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 342.52M | 150.67M | 136.78M | 133.20M | 195.35M | 157.39M | Total Assets |
| 1.28B | 1.72B | 1.58B | 1.44B | 1.57B | 1.61B | Total Debt |
| 570.00M | 2.24B | 1.89B | 1.89B | 1.31B | 907.64M | Net Debt |
| 379.09M | 2.09B | 1.75B | 1.76B | 1.12B | 750.25M | Total Liabilities |
| 706.93M | 2.68B | 2.26B | 2.24B | 1.68B | 1.28B | Stockholders Equity |
| 570.45M | -962.68M | -687.99M | -801.95M | -110.94M | 331.08M |
| Cash Flow | Free Cash Flow | ||||
| 679.81M | 624.08M | 464.68M | 503.42M | 416.25M | 342.93M | Operating Cash Flow |
| 704.84M | 632.96M | 468.92M | 509.45M | 423.82M | 364.92M | Investing Cash Flow |
| -34.52M | -27.99M | -15.95M | -5.67M | 137.85M | -24.58M | Financing Cash Flow |
| -637.27M | -592.92M | -455.00M | -547.16M | -523.57M | -289.42M |
Fair Isaac Technical Analysis
Positive
1952.31
Price Trends
1831.83
Positive
1924.01
Positive
1907.45
Positive
Market Momentum
25.25
Negative
58.21
Neutral
81.81
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FICO, the sentiment is Positive. The current price of 1952.31 is above the 20-day moving average (MA) of 1852.95, above the 50-day MA of 1831.83, and above the 200-day MA of 1907.45, indicating a bullish trend. The MACD of 25.25 indicates Negative momentum. The RSI at 58.21 is Neutral, neither overbought nor oversold. The STOCH value of 81.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FICO.
Fair Isaac Risk Analysis
Fair Isaac disclosed 30 risk factors in its most recent earnings report. Fair Isaac reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fair Isaac Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $35.58B | 16.00 | 16.21% | 1.68% | 1.98% | 7.16% | |
70 Outperform | $22.62B | 79.16 | 8.87% | ― | 9.96% | 50.93% | |
66 Neutral | $46.11B | 86.67 | -47.82% | ― | 14.49% | 21.85% | |
66 Neutral | $53.01B | ― | -31.43% | ― | 29.21% | -51.47% | |
60 Neutral | $41.26B | ― | -8.71% | ― | 28.76% | 58.13% | |
59 Neutral | $10.74B | 10.21 | -6.69% | 3.04% | 7.44% | -10.92% | |
54 Neutral | $38.32B | 51.02 | 4.65% | 1.86% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
FICO
Fair Isaac
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841.46
75.75%
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FIS
Fidelity National Info
79.26
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TYL
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524.64
63.90
13.87%
NET
Cloudflare
121.00
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37.48%
SNOW
Snowflake
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0.17%
Fair Isaac Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 7.88% | Next Earnings Date: Apr 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a strong financial performance with notable revenue growth in both the Scores and Software segments, alongside successful capital returns to shareholders. However, challenges like foreign exchange impact, lower platform usage, and policy uncertainty offset some of the positive momentum.Highlights
Strong Revenue Growth
FICO reported first quarter revenues of $440 million, up 15% over last year. GAAP net income increased by 26%, and GAAP earnings per share rose by 28% from the prior year. Non-GAAP earnings per share were up 20%.
Scores Segment Performance
The Scores segment reported first quarter revenues of $236 million, up 23% versus the prior year. B2B revenues were up 30%, driven by mortgage originations which increased by 110%.
Free Cash Flow and Share Buybacks
Free cash flow was $187 million for the quarter, a 55% increase from the same quarter last year. FICO repurchased 79,000 shares in Q1 and an additional 47,000 shares in January.
Recognition for Innovation
FICO's Customer Communication Service Scam Signal Solution won the Best Anti-Fraud Solution award. FICO also received the Tech of the Future Blockchain and Tokenization Award.
Software Segment Growth
Software segment revenues were $204 million, up 8% from last year, with growth driven mainly by SaaS software and license revenue.
Lowlights
Challenges in Software Segment
The software segment was hindered by the foreign exchange rate impact. Professional services revenue declined by 14%.
B2C Revenue Growth Sluggish
B2C revenues for the Scores segment were up only 3% versus the prior year, indicating slower growth compared to the B2B side.
Government Policy Uncertainty
The Federal Housing Finance Agency (FHFA) indefinitely delayed the implementation of bi-merge and a two-score system, adding uncertainty to FICO's plans.
Lower Platform Usage
Platform usage in the software segment was lower than expected, impacting the net retention rate.
Company Guidance
During the First Quarter 2025 FICO Earnings Conference Call, the company reiterated its fiscal 2025 guidance, reporting strong financial performance with first-quarter revenues of $440 million, a 15% increase from the previous year. The GAAP net income for the quarter was $153 million, up 26%, and GAAP earnings per share were $6.14, up 28% year-over-year. In terms of non-GAAP metrics, net income was $144 million, a 19% increase, and earnings per share were $5.79, a 20% rise from the prior year. The Scores segment reported revenues of $236 million, a 23% increase, with B2B revenues up 30%, driven by a 110% rise in mortgage originations revenues. The Software segment recorded $204 million in revenue, marking an 8% increase, primarily due to growth in SaaS software and license revenue. The company also highlighted a 36% increase in free cash flow over the last four quarters, totaling $673 million, and continued capital return to shareholders, including the repurchase of 79,000 shares in the first quarter.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.