10-KPeriod: FY2017

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2017

Filed November 9, 2017For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported solid revenue growth of 6% for fiscal year 2017, reaching $932.2 million. The company demonstrated strong performance across all segments, with the Scores segment being the primary growth driver, increasing by 10%. This growth reflects FICO's successful expansion in both business-to-business (B2B) and business-to-consumer (B2C) scoring solutions, including its FICO Score Open Access program. The company also continues to push its Decision Management strategy, with a growing emphasis on cloud-based solutions, which now represent 24% of total bookings. Financially, FICO maintained a stable operating margin of 19% and saw a significant 17% increase in net income to $128.3 million, partly due to changes in accounting for stock compensation. The company generated substantial cash flow from operations, enabling it to return value to shareholders through share repurchases, totaling $193.3 million in fiscal year 2017, and a significant increase in its revolving credit facility to $500 million. FICO remains a leader in providing decision management technologies and predictive analytics across various industries, particularly in banking and insurance.

Financial Highlights

53 data points
Beta

Revenue

$932.17M

69.1% Gross Margin

Net Income

$133.41M

14.3% Net Margin

EPS (Diluted)

$4.14

Total Assets

$1.26B

Cash & Equivalents

$105.62M

Free Cash Flow

$205.82M

Financial Statements
Beta
Revenue$932.17M
Cost of Revenue$287.61M
Gross Profit$644.56M
R&D Expenses$110.87M
SG&A Expenses$337.17M
Operating Expenses$752.82M
Operating Income$182.16M
Interest Expense$25.79M
Net Income$133.41M
EPS (Basic)$4.32
EPS (Diluted)$4.14
Shares Outstanding (Basic)30.86M
Shares Outstanding (Diluted)32.24M

Key Highlights

  • 1Revenue increased by 6% to $932.2 million in fiscal year 2017.
  • 2The Scores segment was the strongest performer, with a 10% revenue increase, driven by both B2B and B2C offerings.
  • 3Cloud bookings accounted for 24% of total bookings, indicating growing customer adoption of cloud-based solutions.
  • 4Operating income grew by 4% to $177.2 million, maintaining a 19% operating margin.
  • 5Net income saw a substantial 17% increase to $128.3 million, partially due to accounting changes for stock compensation.
  • 6The company returned $193.3 million to shareholders through share repurchases in fiscal year 2017.
  • 7FICO operates with a diversified revenue base across three segments: Applications, Scores, and Decision Management Software.

Frequently Asked Questions

FICO's revenue grew by 6% to $932.2 million in fiscal year 2017. The primary driver was the Scores segment, which experienced a 10% increase due to strong performance in both business-to-business (B2B) and business-to-consumer (B2C) scoring solutions. The Applications and Decision Management Software segments also contributed positively with 4% and 5% growth, respectively.

FICO is actively expanding its cloud-based offerings, with a significant portion of its software solutions now available through the FICO® Analytic Cloud. In fiscal year 2017, cloud bookings represented 24% of total bookings, demonstrating customer acceptance of these solutions. The company has also partnered with Amazon Web Services (AWS) as its primary cloud infrastructure provider to migrate core applications.

FICO has shifted its strategy from dividend payments to utilizing excess cash flow for share repurchases. In fiscal year 2017, the company repurchased approximately $193.3 million worth of its common stock. As of September 30, 2017, a $250 million stock repurchase program was in place, with $36.7 million remaining. The company also has a $500 million revolving line of credit, providing financial flexibility.

Key risks highlighted by FICO include the potential failure of its Decision Management strategy, reliance on a few key products and customers (including credit reporting agencies), inability to access new markets or develop new distribution channels, and risks associated with developing and introducing new products. Competition from established players and emerging technologies is also a significant concern.