10-KPeriod: FY2014

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2014

Filed November 10, 2014For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid financial performance for the fiscal year ended September 30, 2014, with total revenues increasing by 6% to $789.0 million. This growth was driven by increases across all three segments: Applications, Scores, and Tools. The company continues to focus on its Decision Management strategy, expanding its cloud-based offerings and investing in technology. Despite a slight decrease in operating margin to 21% from 22% due to investments in cloud and SaaS, net income rose by 5% to $94.9 million, with diluted earnings per share increasing by 10% to $2.72. FICO also demonstrated a commitment to shareholder value through a robust share repurchase program, repurchasing approximately $214.9 million of its stock during the fiscal year.

Financial Highlights

53 data points
Beta

Revenue

$788.99M

68.4% Gross Margin

Net Income

$94.88M

12.0% Net Margin

EPS (Diluted)

$2.72

Total Assets

$1.19B

Cash & Equivalents

$105.08M

Free Cash Flow

$162.44M

Financial Statements
Beta
Revenue$788.99M
Cost of Revenue$249.28M
Gross Profit$539.70M
R&D Expenses$83.44M
SG&A Expenses$278.20M
Operating Expenses$627.12M
Operating Income$161.87M
Interest Expense$28.55M
Net Income$94.88M
EPS (Basic)$2.80
EPS (Diluted)$2.72
Shares Outstanding (Basic)33.87M
Shares Outstanding (Diluted)34.86M

Key Highlights

  • 1Revenue growth of 6% to $789.0 million, driven by all three operating segments (Applications, Scores, and Tools).
  • 2Net income increased by 5% to $94.9 million, and diluted EPS grew by 10% to $2.72.
  • 3Strategic investments in cloud computing and SaaS initiatives impacted operating margin but are seen as crucial for future growth.
  • 4Significant shareholder returns through a stock repurchase program, with $214.9 million spent in FY2014 and $250 million authorized.
  • 5International revenues continued to grow, representing 42% of total revenue, indicating successful global expansion.
  • 6The company maintained strong operational efficiency, with cost of revenues as a percentage of revenue remaining stable year-over-year.
  • 7FICO continues to innovate with new product introductions and acquisitions (InfoCentricity, Karmasphere) to enhance its decision management platform.

Frequently Asked Questions

FICO's revenue growth in fiscal year 2014 was driven by increases across all three of its operating segments: Applications, Scores, and Tools. Specifically, the Applications segment saw a 6% increase, Scores a 3% increase, and Tools a 14% increase. Growth in the Applications segment was particularly strong, boosted by new fraud solutions, customer communication solutions, and originations solutions.

FICO's continued investment in cloud computing and SaaS initiatives led to an increase in research and development expenses and a slight decrease in operating margin to 21% from 22%. However, management views these investments as essential for expanding addressable markets and future growth, particularly with new offerings like the FICO® Analytic Cloud.

FICO is committed to returning capital to shareholders primarily through its share repurchase program. In fiscal year 2014, the company repurchased approximately $214.9 million of its common stock. As of September 30, 2014, there was $250 million remaining under its current stock repurchase authorization, indicating a continued focus on shareholder returns.

International revenue represented a significant and growing portion of FICO's business, totaling $331.7 million in fiscal year 2014, an increase of 13% from the previous year. This accounted for 42% of total consolidated revenues, demonstrating FICO's successful global expansion and its ability to grow revenue from clients outside the U.S. at a faster rate than domestic revenue.