NYSE:FICO
FAIR ISAAC CORP
FAIR Isaac Corp leverages proprietary data science to power critical decision-making solutions for the world's leading enterprises across finance, retail, and healthcare sectors.
Key Metrics
Investment Thesis
Bull Case
Investors should consider FAIR Isaac Corp a high-quality compounder with a dominant market position in the essential data science infrastructure layer. The consistent revenue growth and expanding profit margins suggest the company can successfully navigate macroeconomic headwinds while increasing shareholder returns through buybacks. As digital transformation accelerates across industries, FICO's AI capabilities are likely to see sustained demand from clients seeking competitive advantages.
Bear Case
The significant debt load with $2.66B in long-term debt and negative shareholders equity creates substantial financial risk if credit markets tighten or earnings miss expectations. Regulatory uncertainty surrounding credit reporting and data privacy could disrupt core revenue streams without providing a clear path to mitigation. High valuation multiples relative to peers may leave little room for error if growth rates slow or competitive pressures intensify.
About FAIR ISAAC CORP
FAIR Isaac Corp (FICO) is a leading global provider of data science solutions and artificial intelligence that empowers businesses to make better decisions through advanced analytics. The company serves diverse markets including consumer finance, healthcare, retail, and government by delivering proprietary credit scoring models, fraud detection systems, and predictive marketing platforms. With strong revenue growth driven by its expanding AI portfolio, FICO helps clients optimize operations and manage risk in an increasingly digital economy.
Analysis
Management Discussion
The company delivered impressive financial results with revenue growing 16% year-over-year to $1.99B and net income increasing 26% to $651.9M, driven by strong demand for its AI-powered solutions. Operating leverage was effectively utilized as operating profit reached $924.9M, demonstrating the scalability of the business model despite rising costs. Cash flow from operations of $778.8M significantly exceeded net income, highlighting the quality of earnings and efficient working capital management.
Industry Overview
The global data analytics and artificial intelligence industry is experiencing rapid expansion as enterprises seek to extract value from vast amounts of unstructured data. This sector is characterized by high barriers to entry due to the need for specialized expertise, proprietary algorithms, and extensive historical data sets. Competition is intensifying as traditional financial institutions develop in-house capabilities while tech giants offer broader but less specialized analytics platforms.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $1.51B | $1.72B | $1.99B |
| Cost of Revenue | $311.1M | $348.2M | $353.7M |
| Gross Profit | $1.20B | $1.37B | $1.64B |
| Operating Expenses | $559.7M | $635.7M | $712.3M |
| Operating Income | $642.8M | $733.6M | $924.9M |
| R&D | $159.9M | $171.9M | $188.3M |
| G&A | $400.6M | $462.8M | $513.0M |
| Stock-Based Comp | $123.8M | $149.4M | $156.7M |
| D&A | $14.6M | $13.8M | $15.0M |
| Depreciation | $10.1M | $9.4M | $10.7M |
| Amortization | $1.1M | $917.0K | $0 |
| Other OpEx | $-841.0K | $917.0K | $10.9M |
| Non-Operating Income | $-89.2M | $-91.6M | $-122.3M |
| Interest Expense | $95.5M | $105.6M | — |
| Pre-Tax Income | $553.6M | $642.0M | $802.6M |
| Income Tax | $124.2M | $129.2M | $150.6M |
| Continuing Ops | $429.4M | $512.8M | $651.9M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $429.4M | $512.8M | $651.9M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $429.4M | $512.8M | $651.9M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $556.4M | $617.4M | $705.2M |
| Cash & Equivalents | $136.8M | $150.7M | $134.1M |
| Accounts Receivable | $387.9M | $426.6M | $529.1M |
| Prepaid Expenses | $31.7M | $40.1M | $41.9M |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $1.02B | $1.10B | $1.16B |
| PP&E (Net) | $11.0M | $38.5M | $67.7M |
| Goodwill | $773.3M | $782.8M | $783.3M |
| Operating Leases | $25.7M | $29.6M | $26.2M |
| LT Securities | $33.0M | $45.3M | $54.6M |
| Other LT Assets | $175.8M | $204.4M | $231.1M |
| Total Assets | $1.58B | $1.72B | $1.87B |
| Current Liabilities | $367.7M | $380.3M | $849.2M |
| Accounts Payable | $19.0M | $22.5M | $32.3M |
| Current Debt | — | — | $399.5M |
| Current Leases | $16.3M | $11.6M | $9.6M |
| Deferred Revenue | $136.7M | $156.9M | $187.4M |
| Other Current Liab | $136.2M | $109.5M | $105.7M |
| Long-Term Liabilities | $1.90B | $2.30B | $2.76B |
| Long-Term Debt | $1.81B | $2.19B | $2.66B |
| LT Operating Leases | $23.9M | $22.0M | $19.2M |
| Other LT Liab | $53.5M | $81.0M | $87.6M |
| Total Liabilities | $2.26B | $2.68B | $3.61B |
| Shareholders' Equity | $-688.0M | $-962.7M | $-1.75B |
| Retained Earnings | $3.39B | $3.90B | $4.55B |
| AOCI | $-102.1M | $-91.6M | $-92.0M |
| Treasury Stock | $5.32B | $6.14B | $7.54B |
| Total L&E | $1.58B | $1.72B | $1.87B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $429.4M | $512.8M | $651.9M |
| Non-Cash Adjustments | $-61.1M | $44.3M | $-54.1M |
| Working Capital Changes | $100.6M | $75.9M | $181.0M |
| Cash from Operations | $468.9M | $633.0M | $778.8M |
| Capital Expenditures | $4.2M | $8.9M | $8.9M |
| Cash from Investing | $-16.0M | $-28.0M | $-43.7M |
| Share Buybacks | $405.5M | $821.7M | $1.41B |
| Cash from Financing | $-455.0M | $-592.9M | $-750.3M |
| FX Effect | $5.6M | $1.8M | $-1.3M |
| Net Change in Cash | $3.6M | $13.9M | $-16.5M |
| Beginning Cash | $133.2M | $136.8M | $150.7M |
| Ending Cash | $136.8M | $150.7M | $134.1M |
Frequently Asked Questions
How does FAIR ISAAC CORP make money?
The company's revenue is primarily derived from licensing its core FICO Score 9 and commercial credit models, selling fraud detection software used in banking and e-commerce, providing customer experience management tools for retailers, and offering consulting services to help clients implement advanced data science strategies.
What are the main risks for FICO?
Regulatory changes regarding consumer privacy and fair lending could impact the usage and licensing of credit scoring models in key markets. Economic downturns may cause clients to delay discretionary IT spending or renegotiate contracts for data science solutions. The company faces intense competition from both established tech giants and agile startups seeking to replicate its AI capabilities. Cybersecurity threats pose a risk to the integrity of sensitive customer data processed on their platforms.
What is FICO's competitive advantage?
FAIR Isaac Corp possesses deep proprietary datasets that improve model accuracy over time, creating a significant barrier to entry for competitors. Its long-standing partnerships with major global banks and financial institutions ensure high switching costs and recurring revenue streams. The company's continuous investment in artificial intelligence and machine learning keeps its solutions ahead of market trends, maintaining its leadership position in the data analytics space.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.