10-KPeriod: FY2007

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2007

Filed November 28, 2007For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported revenues of $822.2 million for the fiscal year ended September 30, 2007, a slight decrease from the prior year. The company operates in four segments: Strategy Machine Solutions, Scoring Solutions, Professional Services, and Analytic Software Tools. The Strategy Machine Solutions segment, which includes core offerings like customer management and fraud detection, saw a revenue decline primarily due to the sale of its mortgage banking solutions product line and a decrease in customer management revenues. However, the Scoring Solutions segment experienced growth, driven by increased demand for risk scoring services and new product offerings. Financially, FICO showed a net income of $104.7 million, a slight increase from the previous year, with diluted EPS of $1.82. The company continued its aggressive share repurchase program, spending $451.1 million on buybacks in fiscal 2007. FICO also maintained a quarterly dividend of $0.02 per share. The company's balance sheet reflects a strong liquidity position with $234.4 million in cash, cash equivalents, and marketable securities, supported by a $600 million revolving credit facility. FICO's business model is heavily reliant on the financial services, insurance, and credit industries, which comprise approximately 74% of its revenue.

Key Highlights

  • 1Fair Isaac Corporation (FICO) reported fiscal year 2007 revenues of $822.2 million, a slight decrease from $825.4 million in fiscal year 2006.
  • 2Net income for fiscal year 2007 was $104.7 million, an increase from $103.5 million in fiscal year 2006, with diluted EPS of $1.82 compared to $1.59 in the prior year.
  • 3The company repurchased a significant amount of its common stock, spending $451.1 million in fiscal year 2007, demonstrating a commitment to returning capital to shareholders.
  • 4FICO continues to rely heavily on its core financial services, insurance, and credit industry clients, which accounted for approximately 74% of its revenue in fiscal year 2007.
  • 5The Strategy Machine Solutions segment, while a significant revenue contributor, experienced a revenue decline, partly due to the divestiture of its mortgage banking solutions product line.
  • 6The Scoring Solutions segment showed growth, driven by increased demand for FICO scores and related services from credit reporting agencies.
  • 7The company has a substantial commitment to research and development, with R&D expenses totaling $70.6 million in fiscal year 2007, indicating continued investment in innovation and product enhancement.

Frequently Asked Questions

Fair Isaac Corporation (FICO) provides Enterprise Decision Management (EDM) solutions, which include analytics, software, and data management to help businesses automate and improve decision-making. Its revenue is primarily generated through the sale of software licenses, transactional fees for scoring and data services, software maintenance fees, and professional services. The company's main customer segments are the financial services, insurance, and credit industries.

In fiscal year 2007, Fair Isaac reported revenues of $822.2 million, a slight decrease from the previous year. Net income increased to $104.7 million, resulting in diluted earnings per share of $1.82. The company maintained a strong liquidity position with $234.4 million in cash, cash equivalents, and marketable securities, and actively repurchased its own stock, spending $451.1 million on buybacks.

Fair Isaac operates in four reportable segments: Strategy Machine Solutions, Scoring Solutions, Professional Services, and Analytic Software Tools. The Strategy Machine Solutions segment saw a revenue decrease, impacted by the sale of its mortgage banking solutions. The Scoring Solutions segment experienced revenue growth, driven by increased demand for risk scoring services. Professional Services and Analytic Software Tools also contributed to overall revenue, with Professional Services showing a modest increase and Analytic Software Tools seeing a notable increase due to higher software license sales.

Fair Isaac identified several key risks, including the potential failure of its Enterprise Decision Management (EDM) strategy, competition, reliance on a few key customers and credit reporting agencies, the long and variable sales cycle of its products, the need to develop successful new products, and risks associated with international operations. The company also highlighted the competitive landscape, particularly from credit reporting agencies that are also distribution partners.