10-KPeriod: FY2005

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2005

Filed December 14, 2005For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported strong revenue growth in fiscal year 2005, reaching $798.7 million, an increase of 13% year-over-year. This growth was primarily driven by strategic acquisitions, including London Bridge Software and Braun Consulting, which bolstered the Strategy Machine Solutions and Professional Services segments, respectively. The company's core business, centered around predictive analytics and decision management systems (Enterprise Decision Management - EDM), continues to be a significant revenue driver, particularly in the financial services, insurance, and telecommunications sectors. Financially, FICO demonstrated robust operating income of $193.0 million, with a healthy operating margin of 24%. The company also managed its debt effectively, including the redemption of subordinated notes. FICO's investment in research and development remains substantial, reflecting a commitment to innovation in its core analytics and software offerings. The company also continued its share repurchase program, returning capital to shareholders. Overall, the filing indicates a company in a strong growth phase, expanding its service offerings and market reach through strategic acquisitions and ongoing investment in its technology.

Key Highlights

  • 1Revenue increased by 13% to $798.7 million in fiscal year 2005, driven by strategic acquisitions and organic growth across key segments.
  • 2Operating income reached $193.0 million, with an operating margin of 24%, showcasing strong profitability.
  • 3Significant acquisitions of London Bridge Software and Braun Consulting were completed, expanding the company's service portfolio and market presence.
  • 4The Strategy Machine Solutions segment remains the largest revenue contributor, with notable growth in collections and recovery, and fraud solutions.
  • 5Scoring Solutions and Professional Services segments also saw substantial revenue increases, indicating broad-based growth.
  • 6The company invested $81.3 million in research and development, highlighting a focus on innovation in predictive analytics and EDM technologies.
  • 7FICO maintained a strong balance sheet with substantial cash reserves and managed its debt, including the redemption of subordinated notes.

Frequently Asked Questions

Fair Isaac's revenue growth in fiscal year 2005 was primarily driven by strategic acquisitions, notably London Bridge Software Holdings plc and Braun Consulting, Inc. These acquisitions significantly contributed to the Strategy Machine Solutions and Professional Services segments, respectively. Additionally, organic growth was observed in the Scoring Solutions and Analytic Software Tools segments, supported by increased demand for risk scoring services and software licenses.

Fair Isaac effectively managed its capital structure. The company completed an exchange offer for its Senior Convertible Notes and redeemed its Convertible Subordinated Notes in September 2004, which reduced interest expenses. As of September 30, 2005, the company had $400 million in Senior Convertible Notes outstanding and maintained a $15 million revolving line of credit, with no borrowings outstanding. The company also continued its common stock repurchase program.

The company views acquisitions as an important part of its revenue growth strategy and anticipates continuing to evaluate and potentially pursue them. Fair Isaac also emphasizes its commitment to future success through continuous innovation, as evidenced by its substantial investments in research and development, which are crucial for maintaining and improving its core technologies and developing new products.