10-KPeriod: FY2019

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2019

Filed November 8, 2019For Securities:FICO

Summary

Fair Isaac Corporation (FICO) demonstrated robust financial performance in its fiscal year ending September 30, 2019. The company reported a significant increase in total revenues, reaching $1.16 billion, a 16% rise from the prior year, largely driven by strong growth in its Scores segment. Operating income also saw a substantial increase of 45%, leading to a 52% rise in net income. FICO's strategic focus on cloud-based solutions continues to yield positive results, with cloud bookings increasing year-over-year. The company also actively returned capital to shareholders through its stock repurchase program. FICO's business is diversified across three key segments: Applications, Scores, and Decision Management Software. The Scores segment, which includes its widely recognized FICO® Scores, experienced exceptional growth, indicating strong demand for its credit scoring products. The Applications segment also showed healthy revenue growth, supported by its fraud and customer communication solutions. While the Decision Management Software segment saw a revenue increase, it continued to operate at a loss, reflecting ongoing investment in cloud infrastructure and new product development. The company's strong financial position and ongoing innovation position it well for continued growth in the analytics and decision management space.

Financial Highlights

54 data points
Beta

Revenue

$1.16B

71.0% Gross Margin

Net Income

$192.12M

16.6% Net Margin

EPS (Diluted)

$6.34

Total Assets

$1.43B

Cash & Equivalents

$106.43M

Free Cash Flow

$236.37M

Financial Statements
Beta
Revenue$1.16B
Cost of Revenue$336.85M
Gross Profit$823.24M
R&D Expenses$149.48M
SG&A Expenses$414.09M
Operating Expenses$906.53M
Operating Income$253.55M
Interest Expense$39.75M
Net Income$192.12M
EPS (Basic)$6.63
EPS (Diluted)$6.34
Shares Outstanding (Basic)28.98M
Shares Outstanding (Diluted)30.29M

Key Highlights

  • 1Total revenues increased by 16% to $1.16 billion in fiscal 2019.
  • 2The Scores segment revenue grew by 25% to $421.2 million, driven by business-to-business and business-to-consumer offerings.
  • 3Operating income increased by 45% to $253.5 million, with operating margin improving to 22%.
  • 4Net income saw a significant increase of 52% to $192.1 million, resulting in diluted EPS of $6.34.
  • 5Cloud bookings represented 39% of total bookings in fiscal 2019, up from 35% in fiscal 2018, indicating a successful shift towards cloud-based solutions.
  • 6The company repurchased approximately 0.9 million shares for $228.9 million during fiscal 2019, demonstrating a commitment to returning value to shareholders.

Frequently Asked Questions

Fair Isaac's revenue growth in fiscal year 2019 was primarily driven by its Scores segment, which saw a 25% increase, and its Applications segment, which grew by 7%. The company's focus on cloud-based solutions, with cloud bookings increasing to 39% of total bookings, also contributed to the positive revenue trend.

Fair Isaac is returning value to its shareholders through its stock repurchase program. In fiscal year 2019, the company repurchased approximately 0.9 million shares for $228.9 million. The company also has an ongoing authorization for stock repurchases up to an aggregate cost of $250.0 million.

FICO is actively transforming its business to emphasize recurring revenue from cloud-based solutions. The majority of its software solutions are now available through the FICO® Analytic Cloud and AWS. This strategy is showing positive results, with cloud bookings increasing year-over-year and contributing significantly to overall growth.

In August 2019, Fair Isaac acquired EZMCOM for $18.6 million. EZMCOM provides digital security and authentication products, and this acquisition is expected to enhance FICO's offerings for seamless authentication and customer onboarding across digital channels for its financial services clients.