10-KPeriod: FY2003

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2003

Filed December 12, 2003For Securities:FICO

Summary

Fair Isaac Corporation (FICO) in its 2003 10-K filing demonstrates significant growth driven by strategic acquisitions, most notably HNC Software Inc. This integration substantially expanded FICO's product offerings and market reach, leading to a substantial increase in revenues and operating income year-over-year. The company's core business revolves around providing sophisticated analytic, software, and data management products and services aimed at improving business decision-making across various industries, including financial services, insurance, and telecommunications. Financially, FICO experienced robust revenue growth, with a notable 60% increase in fiscal 2003. This growth was largely propelled by the Strategy Machine Solutions segment, significantly boosted by the HNC acquisition. The company also strategically managed its capital, issuing senior convertible notes while continuing its share repurchase programs and consistent dividend payments. FICO's strong market position, particularly in credit scoring with its FICO® scores, along with its expansion into new product areas and services, positions it as a key player in enterprise decision management.

Key Highlights

  • 1Reported a significant increase in total revenues, up 60% to $629.3 million in fiscal 2003, largely due to the acquisition of HNC Software Inc.
  • 2The Strategy Machine Solutions segment saw substantial growth, with revenues increasing by 100% to $380.6 million in fiscal 2003, driven by the HNC acquisition and growth in consumer score services.
  • 3Operating income surged by 270% to $174.2 million in fiscal 2003, benefiting from the HNC acquisition and the non-recurrence of the prior year's in-process research and development charge.
  • 4Acquired multiple companies in fiscal 2003, including NAREX Inc. and Diversified HealthCare Services, Inc., to expand its product portfolio and market presence.
  • 5Issued $400 million in 1.5% Senior Convertible Notes in August 2003 to fund operations and growth, strengthening its capital position.
  • 6FICO's primary revenue streams are from the consumer credit, financial services, and insurance industries, which accounted for 82% of revenues in fiscal 2003.
  • 7The company continues to invest in research and development, with R&D expenses increasing to $67.6 million in fiscal 2003, reflecting ongoing innovation in its core technologies.

Frequently Asked Questions

The primary driver of Fair Isaac's significant revenue growth in fiscal year 2003 was the acquisition of HNC Software Inc. This acquisition, completed in August 2002, substantially expanded FICO's product offerings and market reach, leading to a 60% increase in total revenues to $629.3 million.

In fiscal year 2003, Fair Isaac managed its capital structure by issuing $400 million in 1.5% Senior Convertible Notes, which provided additional funding for operations and growth. The company also continued its practice of repurchasing its own common stock and consistently paid quarterly dividends.

The consumer credit, financial services, and insurance industries were the most significant contributors to Fair Isaac's revenue in fiscal year 2003, accounting for 82% of the company's total revenue for that period.

Fair Isaac's strategy involves acquiring complementary products, services, and technologies, as demonstrated by its acquisitions of HNC, NAREX, and Diversified HealthCare Services in fiscal years 2002 and 2003. The company also invests significantly in research and development to maintain and improve its core technologies, enhance existing products, and develop new offerings to meet evolving market needs.