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Fair Isaac Corporation (FICO)
NYSE:FICO
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Fair Isaac
(NYSE:FICO)
73Outperform
Positive Factors
Earnings
Margins continue to expand past what are already impressive levels, helping support a sizable bottom-line beat.
Market Position
FICO shares will be able to outperform peers, especially in a potential 'flight to quality' given the company's dominant market share, ample pricing power, and shareholder-friendly capital allocation program.
Negative Factors
Regulatory Risks
U.S. policymakers have criticized FICO’s price increases, and forthcoming regulatory changes could create a competitive opportunity for a challenger scoring system.
Valuation Concerns
FICO stock carries an expensive valuation that embeds high growth expectations despite meaningful execution risk.
Fair Isaac (FICO) vs. S&P 500 (SPY)
Market Cap
$46.11B
Dividend YieldN/A
Average Volume (3M)195.38K
Price to Earnings (P/E)86.7
Beta (1Y)1.28
Revenue Growth14.72%
EPS Growth21.81%
CountryUS
Employees3,604
SectorTechnology
Sector Strength64
IndustrySoftware - Application
Share Statistics
EPS (TTM)5.79
Shares Outstanding24,418,139
10 Day Avg. Volume216,363
30 Day Avg. Volume195,383
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)25.49
Price to Cash Flow (P/CF)58.30
P/FCF Ratio52.30
Enterprise Value/Market Cap1.12
Enterprise Value/RevenueN/A
Enterprise Value/Gross Profit37.75
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$2,173.91Price Target Upside8.60% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
Fair Isaac Business Overview & Revenue Model
Company DescriptionFair Isaac Corporation develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It operates through two segments, Scores and Software. The Software segment offers pre-configured decision management solution designed for various business problems or processes, such as marketing, account origination, customer management, customer engagement, fraud detection, financial crimes compliance, collection, and marketing, as well as associated professional services. This segment also provides FICO Platform, a modular software offering designed to support advanced analytic and decision use cases, as well as stand-alone analytic and decisioning software that can be configured by customers to address a wide range of business use cases. The Scores segment provides business-to-business scoring solutions and services for consumers that give clients access to analytics to be integrated into their transaction streams and decision-making processes, as well as business-to-consumer scoring solutions comprising myFICO.com subscription offerings. Fair Isaac Corporation markets its products and services primarily through its direct sales organization and indirect channels, as well as online. The company was formerly known as Fair Isaac & Company, Inc. and changed its name to Fair Isaac Corporation in July 1992. Fair Isaac Corporation was founded in 1956 and is headquartered in Bozeman, Montana.
How the Company Makes MoneyFICO generates revenue through a combination of software sales, professional services, and credit scoring services. A significant portion of its income comes from licensing its analytics software and tools to financial institutions, which use these products for decision management and risk assessment. FICO also earns revenue from consulting services, helping businesses implement and optimize its technology solutions. Additionally, the company receives revenue from its credit scoring services, which are used by lenders and consumers alike to evaluate creditworthiness. FICO's strategic partnerships with banks, credit card companies, and other financial institutions further bolster its earnings by facilitating widespread adoption of its scoring models and analytics services.
Fair Isaac Key Performance Indicators (KPIs)
Any
On Premises and SAAS Software Revenue by Deployment Method
Breaks down software revenue based on deployment, providing insight into the company's transition to cloud-based solutions and its impact on recurring revenue streams and customer retention.
Breaks down software revenue based on deployment, providing insight into the company's transition to cloud-based solutions and its impact on recurring revenue streams and customer retention.
Data provided by:
Main Street Data
Main Street DataFair Isaac Financial Statement Overview
Summary
Fair Isaac shows strong profitability and cash flow generation, with high margins and positive cash flow metrics. However, the balance sheet is a concern due to negative equity and high leverage. These financial risks are partially offset by effective cost management and operational efficiency.Income Statement
Fair Isaac demonstrates strong profitability metrics with a Gross Profit Margin of 80.1% and a Net Profit Margin of 30.7% for TTM, indicating high efficiency in converting revenue to profit. The company's Revenue Growth Rate is 3.4%, showing moderate growth. Both EBIT and EBITDA Margins are robust at 42.9% and 44.1%, respectively, reflecting effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet presents a challenging picture with a negative Stockholders' Equity of $1.14 billion, resulting in a negative Equity Ratio and a high Debt-to-Equity Ratio, which indicates significant financial leverage. This high level of debt compared to equity could pose a risk in economic downturns. Return on Equity is not applicable due to negative equity.40
Negative
Cash Flow
The cash flow statement shows strong cash generation with a Free Cash Flow of $679.8 million, indicating solid liquidity. The Operating Cash Flow to Net Income Ratio is 1.3, signifying efficient cash conversion from earnings. The Free Cash Flow Growth Rate is 8.9%, pointing to positive momentum in cash generation.78
Positive
| Breakdown | ||||
| Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.72B | 1.51B | 1.38B | 1.32B | 1.29B | Gross Profit |
| 1.37B | 1.20B | 1.08B | 984.07M | 933.42M | EBIT |
| 733.63M | 642.83M | 542.41M | 321.13M | 295.97M | EBITDA |
| 761.49M | 663.81M | 576.66M | 554.93M | 349.56M | Net Income Common Stockholders |
| 512.81M | 429.38M | 373.54M | 392.08M | 236.41M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 150.67M | 136.78M | 133.20M | 195.35M | 157.39M | Total Assets |
| 1.72B | 1.58B | 1.44B | 1.57B | 1.61B | Total Debt |
| 2.24B | 1.89B | 1.89B | 1.31B | 907.64M | Net Debt |
| 2.09B | 1.75B | 1.76B | 1.12B | 750.25M | Total Liabilities |
| 2.68B | 2.26B | 2.24B | 1.68B | 1.28B | Stockholders Equity |
| -962.68M | -687.99M | -801.95M | -110.94M | 331.08M |
| Cash Flow | Free Cash Flow | |||
| 624.08M | 464.68M | 503.42M | 416.25M | 342.93M | Operating Cash Flow |
| 632.96M | 468.92M | 509.45M | 423.82M | 364.92M | Investing Cash Flow |
| -27.99M | -15.95M | -5.67M | 137.85M | -24.58M | Financing Cash Flow |
| -592.92M | -455.00M | -547.16M | -523.57M | -289.42M |
Fair Isaac Technical Analysis
Positive
2001.68
Price Trends
1846.72
Positive
1908.69
Positive
1915.53
Positive
Market Momentum
38.50
Negative
61.98
Neutral
87.07
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FICO, the sentiment is Positive. The current price of 2001.68 is above the 20-day moving average (MA) of 1875.86, above the 50-day MA of 1846.72, and above the 200-day MA of 1915.53, indicating a bullish trend. The MACD of 38.50 indicates Negative momentum. The RSI at 61.98 is Neutral, neither overbought nor oversold. The STOCH value of 87.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FICO.
Fair Isaac Risk Analysis
Fair Isaac disclosed 30 risk factors in its most recent earnings report. Fair Isaac reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Fair Isaac Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $36.27B | 16.32 | 16.21% | 1.64% | 1.98% | 7.16% | |
73 Outperform | $46.11B | 86.67 | -47.82% | ― | 14.72% | 21.81% | |
68 Neutral | $23.27B | 81.36 | 8.87% | ― | 9.96% | 50.93% | |
66 Neutral | $53.29B | ― | -31.43% | ― | 29.21% | -51.47% | |
60 Neutral | $41.92B | ― | -8.71% | ― | 28.76% | 58.13% | |
59 Neutral | $10.65B | 10.45 | -6.56% | 3.01% | 7.31% | -12.18% | |
54 Neutral | $38.32B | 51.02 | 4.65% | 1.88% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
FICO
Fair Isaac
2,001.68
836.33
71.77%
CTSH
Cognizant
75.23
9.98
15.30%
FIS
Fidelity National Info
77.71
9.58
14.06%
TYL
Tyler Technologies
539.60
75.14
16.18%
NET
Cloudflare
122.61
33.64
37.81%
SNOW
Snowflake
165.36
7.59
4.81%
Fair Isaac Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q2-2025)
| % Change Since: 2.05%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
FICO's earnings call highlighted strong financial performance with significant growth in revenues and net income, particularly driven by the Scores segment. The company demonstrated ongoing innovation and strategic partnerships. However, challenges were noted in the Software segment's slower growth and macroeconomic factors affecting usage. Overall, the highlights outweigh the lowlights, indicating a positive sentiment.Q2-2025 Updates
Positive Updates
Strong Revenue and Income Growth
FICO reported Q2 2025 revenues of $499 million, up 15% from the prior year. GAAP net income increased by 25% to $163 million, and GAAP earnings per share rose by 28% to $6.59.
Scores Segment Performance
The Scores segment saw revenues increase by 25% to $297 million, driven by a 31% rise in B2B revenues, primarily due to a 48% increase in mortgage origination revenues.
Free Cash Flow Growth
FICO delivered free cash flow of $65 million in Q2 and $677 million over the last four quarters, marking a 45% increase over the prior trailing 12-month period.
Innovative Product Developments
FICO announced the Kenya-specific FICO score and continued to push financial literacy initiatives. The FICO Score 10 T adoption program showed strong results, with significant client engagement in mortgage originations.
Strategic Partnerships
New partnerships were established with Fujitsu in Japan and dacadoo in the life insurance industry, aiming to enhance digital transformation and precision in underwriting.
Negative Updates
Software Segment Slower Growth
Software segment revenues grew only 2% to $202 million, with professional services declining by 9%. There were usage headwinds in both platform and non-platform categories.
Challenges with Non-Platform ARR
Non-platform ARR declined by 3%, reflecting some macroeconomic factors affecting customer usage and outreach programs.
Economic Uncertainty Impact
The macroeconomic environment remains fluid, with some customers delaying or downsizing outreach programs due to volatility.
Company Guidance
During the FICO Second Quarter 2025 Earnings Conference Call, the guidance provided was optimistic, with the company reiterating its fiscal 2025 guidance amidst a solid performance. The company reported second-quarter revenue of $499 million, which marked a 15% increase compared to the prior year. GAAP net income was $163 million, a 25% increase, and GAAP earnings per share rose by 28% to $6.59. Non-GAAP net income was $193 million, also up 25%, with non-GAAP earnings per share at $7.81, a 27% increase from the previous year. The company generated $65 million in free cash flow during the quarter, with a trailing twelve-month free cash flow of $677 million, reflecting a 45% increase. The Scores segment saw significant growth, with revenues of $297 million, up 25% year-over-year, driven by a 31% increase in B2B revenues, predominantly from mortgage originations. Meanwhile, the Software segment delivered $202 million in revenue, up 2% from the prior year. Overall, FICO maintains confidence in its strategic initiatives and financial prospects for the remainder of the fiscal year.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.