Fair Isaac Corporation reports 34.9% Net Income growth in 2019 and 1.7 pp EBITDA Margin growth from 22.9% to 24.6%
11/04/2019 • About Fair Isaac Corporation (
$FICO) • By InTwits
Fair Isaac Corporation reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 24.6% in FY2019 vs. 22.9% in FY2018 vs. 20.4% in FY2015
- Fair Isaac Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2015-FY2019 is 5.3%. Average EBITDA Margin for the same period was 22.9%
- Fair Isaac Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.5%. At the same time it's a lot of higher than industry average of 7.8%.
- The company has highly profitable business model: ROIC is 23.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 2.5x while industry average is -2.1x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Fair Isaac Corporation's Revenue surged on 12.4%. Revenue growth showed slowdown in FY19Q4 - it was 9.0% YoY. During FY2015-FY2019 Revenue growth bottomed in FY2016 at 5.1% and was accelerating since that time. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.7 pp from 22.9% to 24.6% in FY2019. EBITDA Margin followed a growing trend at 0.84 pp per annum in FY2015-FY2019.
Gross Margin increased slightly on 1.1 pp from 69.9% to 71.0% in FY2019. SG&A as a % of Revenue decreased slightly on 1.1 pp from 36.8% to 35.7% in FY2019.
Net Income margin increased on 2.8 pp from 13.8% to 16.6% in FY2019. Net Income margin stuck to a growing trend at 1.4 pp per annum in FY2015-FY2019.
Investments (CAPEX, working capital and M&A)
Fair Isaac Corporation's CAPEX/Revenue was 2.1% in FY2019. Fair Isaac Corporation's CAPEX/Revenue showed almost no change from FY2016 to FY2019. It's average CAPEX/Revenue for the last three years was 2.4%.
Return on investment
The company operates at high and attractive ROIC (23.3%) and ROE (66.6%). ROIC increased on 3.4 pp from 20.0% to 23.3% in FY2019. ROE jumped on 25.3 pp from 41.3% to 66.6% in FY2019. ROIC grew at 2.3 pp per annum in the last 5 years. ROE followed a growing trend at 11.1 pp per annum in FY2015-FY2019.
Leverage (Debt)
Debt level is 2.5x Net Debt / EBITDA and 2.9x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 2.8x to 2.5x in FY2019. Debt increased on 8.0% while cash jumped on 18.2%.
Fair Isaac Corporation has short term refinancing risk: cash is only 48.8% of short term debt.
Valuation and dividends
The company's trades at EV/EBITDA 32.1x and P/E 43.8x.
Financial and operational results
FY ended 09/30/2019
Fair Isaac Corporation ($FICO) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 839 | 881 | 932 | 1,032 | 1,160 | 12.4% |
| Gross Profit | 568 | 616 | 645 | 722 | 823 | 14.1% |
| SG&A | 300 | 329 | 340 | 380 | 414 | 8.9% |
| EBITDA | 171 | 201 | 213 | 237 | 285 | 20.5% |
| EBIT | 138 | 170 | 177 | 206 | | |
| Interest expence | | 27 | 26 | 31 | | |
| Tax | 23 | 35 | 23 | 46 | | |
| Net Income | 87 | 109 | 128 | 142 | 192 | 34.9% |
| Stock Based Compensation | 44 | 80 | 61 | 73 | | |
Balance Sheet
|
|---|
| Cash | 86 | 76 | 106 | 90 | 106 | 18.2% |
| Accounts Receivable | 159 | 168 | 169 | 209 | | |
| Accounts Payable | 20 | 23 | 20 | 20 | | |
| Short Term Debt | 92 | 77 | 142 | 235 | 218 | -7.2% |
| Long Term Debt | 516 | 494 | 463 | 529 | 607 | 14.7% |
Cash flow
|
|---|
| Capex | 25 | 22 | 20 | 31 | 24 | -23.4% |
| Dividends | 3 | 2 | 1 | | | |
| Acquisitions | 57 | 6 | | | | |
Ratios
|
|---|
| Revenue growth | 6.3% | 5.1% | 5.8% | 10.8% | 12.4% | |
| EBITDA growth | -11.9% | 17.4% | 6.1% | 10.9% | 20.5% | |
|
|---|
| Gross Margin | 67.7% | 69.9% | 69.2% | 69.9% | 71.0% | 1.1% |
| EBITDA Margin | 20.4% | 22.8% | 22.9% | 22.9% | 24.6% | 1.7% |
| EBIT Margin | 16.4% | 19.2% | 19.0% | 20.0% | |
| SG&A, % of revenue | 35.8% | 37.3% | 36.5% | 36.8% | 35.7% | -1.1% |
| SBC, % of revenue | 5.3% | 9.0% | 6.6% | 7.1% | |
| Net Income Margin | 10.3% | 12.4% | 13.8% | 13.8% | 16.6% | 2.8% |
| CAPEX, % of revenue | 3.0% | 2.5% | 2.1% | 3.0% | 2.1% | -1.0% |
|
|---|
| ROIC | 13.4% | 16.4% | 17.3% | 20.0% | 23.3% | 3.4% |
| ROE | 19.4% | 24.8% | 29.4% | 41.3% | 66.6% | 25.3% |
| Net Debt/EBITDA | 3.0x | 2.5x | 2.3x | 2.8x | 2.5x | -0.3x |
| Interest coverage ratio (ICR) | | 6.4x | 6.9x | 6.6x | |
| Interest expence / Average debt | | 4.5% | 4.4% | 4.6% | | |
People
|
|---|
| Insider ownership | 3.0% | 3.0% | 3.0% | 3.0% | | |
| Employees | 2,803 | 3,088 | 3,299 | 3,668 | | |
| Revenue/Employee, th. $ | 299 | 285 | 283 | 281 | | |
Fair Isaac Corporation ($FICO) key quoterly financial indicators
| mln. $ | FY19Q1 | FY19Q2 | FY19Q3 | FY19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 262 | 278 | 314 | 305 | | 12.8% | 8.5% | 21.0% | 9.0% |
| EBITDA | 57 | 56 | 94 | 78 | | 27.9% | 4.1% | 69.0% | 0.1% |
| Net Income | 40 | 33 | 64 | 55 | | 21.7% | 5.9% | 97.8% | 9.0% |
Balance Sheet
|
|---|
| Cash | 80 | 77 | 79 | 106 | | -15.1% | -28.6% | -34.1% | 17.7% |
| Short Term Debt | 228 | 218 | 218 | 218 | | 13.4% | 14.1% | 7.9% | -7.2% |
| Long Term Debt | 604 | 604 | 605 | 607 | | 30.5% | 17.8% | 8.7% | 14.8% |
Ratios
|
|---|
| Gross Margin | 71.0% | 69.0% | 72.0% | 71.0% | | 3.0% | 0.0% | 2.2% | -0.6% |
| EBITDA Margin | 21.8% | 20.1% | 29.9% | 25.6% | | 2.6% | -0.9% | 8.5% | -2.3% |
| Net Income Margin | 15.3% | 11.9% | 20.4% | 18.0% | | 1.1% | -0.3% | 7.9% | -0.0% |
Peers in Application Software
Below we provide Fair Isaac Corporation benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| nFusz Inc ($FUSZ) | | | | 433.3% | |
| CloudCommerce Inc ($CLWD) | -38.1% | 247.6% | 40.9% | 301.1% | |
| Seven Stars Cloud Group, Inc. ($SSC) | 134.7% | 663.8% | 310.3% | 161.7% | |
| Aurora Mobile Limited ($JG) | | | 304.9% | 150.8% | |
| Intelligent Systems Corporation ($INS) | 14.2% | 71.0% | 12.2% | 119.0% | |
| |
|---|
| Median (152 companies) | 13.9% | 14.5% | 15.7% | 15.2% | 9.3% |
|---|
| Fair Isaac Corporation ($FICO) | | 5.1% | 5.8% | 10.8% | 12.4% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 97.4% | 98.0% | 97.6% | 96.5% | |
| hopTo Inc ($HPTO) | 87.8% | 95.9% | 98.2% | 95.4% | |
| Aware, Inc. ($AWRE) | 87.2% | 90.3% | 94.6% | 92.3% | |
| Alteryx, Inc. ($AYX) | 80.5% | 81.3% | 83.4% | 91.0% | |
| Aspen Technology, Inc. ($AZPN) | 88.7% | 89.7% | 90.2% | 89.9% | |
| |
|---|
| Median (151 companies) | 63.0% | 63.8% | 64.4% | 65.3% | 47.7% |
|---|
| Fair Isaac Corporation ($FICO) | 67.7% | 69.9% | 69.2% | 69.9% | 71.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Aspen Technology, Inc. ($AZPN) | 42.2% | 46.0% | 45.2% | 43.3% | |
| ANSYS, Inc. ($ANSS) | 45.8% | 45.1% | 41.9% | 41.4% | |
| Paycom Software, Inc. ($PAYC) | 19.5% | 35.1% | 34.4% | 35.9% | |
| j2 Global, Inc. ($JCOM) | 40.6% | 41.7% | 36.5% | 35.7% | |
| Adobe Inc. ($ADBE) | 25.9% | 31.2% | 34.2% | 35.3% | |
| |
|---|
| Median (153 companies) | -11.3% | -5.3% | -4.2% | -3.3% | 12.0% |
|---|
| Fair Isaac Corporation ($FICO) | 20.4% | 22.8% | 22.9% | 22.9% | 24.6% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| TimefireVR Inc ($TFVR) | 350.5% | 4.3% | | 1,021.9% | |
| MGT Capital Investments Inc ($MGTI) | 36.5% | 221.4% | 129.8% | 344.5% | |
| Integrated Ventures Inc ($INTV) | | | | 199.9% | 15.2% |
| ShotSpotter, Inc. ($SSTI) | 18.3% | 28.9% | 27.1% | 24.3% | |
| Ellie Mae, Inc. ($ELLI) | 20.6% | 16.7% | 21.1% | 19.4% | |
| |
|---|
| Median (154 companies) | 2.7% | 3.0% | 2.3% | 2.4% | 3.3% |
|---|
| Fair Isaac Corporation ($FICO) | 3.0% | 2.5% | 2.1% | 3.0% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| InsPro Technologies Corp ($ITCC) | | | | 127.4% | |
| Manhattan Associates, Inc. ($MANH) | 78.7% | 99.3% | 102.5% | 80.9% | |
| Intuit Inc. ($INTU) | 23.7% | 52.1% | 72.6% | 66.8% | |
| Aspen Technology, Inc. ($AZPN) | | | | 58.1% | |
| Paycom Software, Inc. ($PAYC) | 30.5% | 75.4% | 51.1% | 47.5% | |
| |
|---|
| Median (180 companies) | -13.1% | -9.8% | -11.8% | -10.6% | 8.5% |
|---|
| Fair Isaac Corporation ($FICO) | 13.4% | 16.4% | 17.3% | 20.0% | 23.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Upland Software, Inc. ($UPLD) | | 16.4x | 115.6x | 16.7x | |
| Nuance Communications, Inc. ($NUAN) | 5.7x | 5.3x | 7.1x | 15.2x | |
| Asure Software Inc ($ASUR) | 4.5x | 3.6x | 9.5x | 14.5x | |
| SS&C Technologies Holdings, Inc. ($SSNC) | 7.3x | 4.6x | 3.1x | 8.5x | |
| Avaya Holdings Corp. ($AVYA) | | | | 7.4x | |
| |
|---|
| Median (69 companies) | -0.9x | -0.9x | -0.9x | -0.7x | -0.9x |
|---|
| Fair Isaac Corporation ($FICO) | 3.0x | 2.5x | 2.3x | 2.8x | 2.5x |
