10-KPeriod: FY2023

FAIR ISAAC CORP Annual Report, Year Ended Sep 30, 2023

Filed November 8, 2023For Securities:FICO

Summary

Fair Isaac Corporation (FICO) reported a strong fiscal year 2023, with total revenue increasing by 10% to $1.5 billion. This growth was driven by a robust performance in both its Scores and Software segments, with the Software segment experiencing a significant 22% increase in Annual Recurring Revenue (ARR). The company highlighted its platform-first, cloud-delivered strategy in the Software segment, focusing on expanding the capabilities and market penetration of FICO® Platform. Financially, FICO demonstrated healthy profitability, with operating income up 19% and net income up 15%. The company continued to return value to shareholders through its stock repurchase program, repurchasing $407.3 million in shares during the fiscal year. FICO's market position remains strong, with its FICO® Score being the standard measure of consumer credit risk in the U.S. The company is also actively expanding its global reach and investing in product development, including scores that utilize alternative data for greater credit access.

Financial Highlights

52 data points
Beta

Revenue

$1.51B

79.4% Gross Margin

Net Income

$429.38M

28.4% Net Margin

EPS (Diluted)

$16.93

Total Assets

$1.58B

Cash & Equivalents

$136.78M

Free Cash Flow

$464.68M

Financial Statements
Beta
Revenue$1.51B
Cost of Revenue$311.05M
Gross Profit$1.20B
R&D Expenses$159.95M
SG&A Expenses$400.56M
Operating Expenses$870.73M
Operating Income$642.83M
Interest Expense$95.55M
Net Income$429.38M
EPS (Basic)$17.18
EPS (Diluted)$16.93
Shares Outstanding (Basic)24.99M
Shares Outstanding (Diluted)25.37M

Key Highlights

  • 1Total revenue increased by 10% to $1.5 billion in fiscal year 2023.
  • 2Software segment's Annual Recurring Revenue (ARR) grew by 22% to $669.4 million.
  • 3Dollar-Based Net Retention Rate (DBNRR) for the Software segment reached 120% in Q4 FY2023.
  • 4Operating income saw a 19% increase, reaching $642.8 million.
  • 5Net income rose by 15% to $429.4 million, with diluted EPS at $16.93.
  • 6The company repurchased $407.3 million of its common stock during fiscal year 2023.
  • 7FICO® Score remains the standard for consumer credit risk, with continued international expansion and development of new scoring models.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in business-to-business scores revenue and a significant rise in on-premises and SaaS software revenue, largely attributable to the expansion of SaaS offerings and growth on the FICO® Platform.

FICO has a $600 million revolving line of credit and a $300 million term loan. As of September 30, 2023, total debt was $1.9 billion. The company ended fiscal year 2023 with $136.8 million in cash and cash equivalents and was compliant with its debt covenants. They also actively repurchased shares, indicating a focus on shareholder returns.

The FICO® Platform is central to the company's software strategy, aiming to integrate all of FICO's software products onto a single, modular platform. This approach is designed to drive revenue growth through increased customer adoption ('land and expand') and cater to a wider range of business use cases, particularly for medium-sized businesses. ARR from FICO Platform-based products was $173.2 million, representing 26% of total software ARR.

Key risks include the potential for the Software segment strategy to be unreceptive in the market, failure to develop successful new products or manage product defects, reliance on a few large customers and key partners (like the major credit bureaus), intense competition, rapid technological changes, and cybersecurity threats. Regulatory changes related to data privacy and AI are also identified as significant risks.