Fair Isaac Corporation reports 23.1% Net Income growth in 2020 and 11.6% Revenue growth
11/10/2020 • About Fair Isaac Corporation (
$FICO) • By InTwits
Fair Isaac Corporation reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is expanding: 27.0% in FY2020 vs. 24.6% in FY2019 vs. 22.8% in FY2016
- Fair Isaac Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.3%. At the same time it's a lot of higher than industry average of 7.3%.
- CAPEX is quite volatile: $1,407m in FY2020, $887m in FY2019, $784m in FY2018, $690m in FY2017, $539m in FY2016
- The company has highly profitable business model: ROIC is 25.1%
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 11.6%. Revenue growth showed acceleration in FY20Q4 - it increased 22.7% YoY. Revenue growth was accelerating on average by 2.0 pp per annum in FY2016-FY2020. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 2.5 pp from 24.6% to 27.0% in FY2020. EBITDA Margin stuck to a growing trend at 1.0 pp per annum in FY2016-FY2020.
Gross Margin increased slightly on 1.1 pp from 71.0% to 72.1% in FY2020. During the last 5 years Gross Margin bottomed in FY2017 at 69.2% and was growing since that time. SG&A as a % of Revenue decreased on 3.2 pp from 35.7% to 32.5% in FY2020.
Net Income margin increased slightly on 1.7 pp from 16.6% to 18.3% in FY2020. Net Income margin stuck to a growing trend at 1.4 pp per annum in FY2016-FY2020.
Investments (CAPEX, working capital and M&A)
In FY2020 Fair Isaac Corporation had CAPEX/Revenue of 1.7%. Fair Isaac Corporation's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 2.3%.
Return on investment
The company operates at high and attractive ROIC (25.1%) and ROE (76.2%). ROIC increased slightly on 1.7 pp from 23.3% to 25.1% in FY2020. ROE increased on 9.6 pp from 66.6% to 76.2% in FY2020. ROIC grew at 2.3 pp per annum in the last 5 years. ROE grew at 14.0 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 2.2x Net Debt / EBITDA and 2.7x Debt / EBITDA. Net Debt / EBITDA dropped on 0.3x from 2.5x to 2.2x in FY2020. Debt jumped on 13.4% while cash jumped on 47.9%.
Fair Isaac Corporation has no short term refinancing risk: cash is higher than short term debt (131.2%).
Valuation and dividends
Fair Isaac Corporation's trades at EV/EBITDA 41.8x and P/E 58.6x.
Management team
The company's CEO is William J Lansing "Will". William J Lansing "Will" has 9 years tenure with the company. The company's CFO Michael I Mclaughlin has spent 1 year with the company.
Financial and operational results
FY ended 09/30/2020
Fair Isaac Corporation ($FICO) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 881 | 932 | 1,032 | 1,160 | 1,295 | 11.6% |
| Gross Profit | 616 | 645 | 722 | 823 | 933 | 13.4% |
| SG&A | 329 | 340 | 380 | 414 | 421 | 1.7% |
| EBITDA | 201 | 213 | 237 | 285 | 350 | 22.7% |
| EBIT | 170 | 177 | 206 | | | |
| Interest expence | 27 | 26 | 31 | | | |
| Tax | 35 | 23 | 46 | | | |
| Net Income | 109 | 128 | 142 | 192 | 236 | 23.1% |
| Stock Based Compensation | 80 | 61 | 73 | | | |
Balance Sheet
|
|---|
| Cash | 76 | 106 | 90 | 106 | 157 | 47.9% |
| Accounts Receivable | 168 | 169 | 209 | | | |
| Accounts Payable | 23 | 20 | 20 | | | |
| Short Term Debt | 77 | 142 | 235 | 218 | 120 | -45.0% |
| Long Term Debt | 494 | 463 | 529 | 607 | 816 | 34.4% |
Cash flow
|
|---|
| Capex | 22 | 20 | 31 | 24 | 22 | -8.3% |
| Dividends | 2 | 1 | | | | |
| Acquisitions | 6 | | | | | |
Ratios
|
|---|
| Revenue growth | 5.1% | 5.8% | 10.8% | 12.4% | 11.6% | |
| EBITDA growth | 17.4% | 6.1% | 10.9% | 20.5% | 22.7% | |
|
|---|
| Gross Margin | 69.9% | 69.2% | 69.9% | 71.0% | 72.1% | 1.1% |
| EBITDA Margin | 22.8% | 22.9% | 22.9% | 24.6% | 27.0% | 2.5% |
| EBIT Margin | 19.2% | 19.0% | 20.0% | | |
| SG&A, % of revenue | 37.3% | 36.5% | 36.8% | 35.7% | 32.5% | -3.2% |
| SBC, % of revenue | 9.0% | 6.6% | 7.1% | | |
| Net Income Margin | 12.4% | 13.8% | 13.8% | 16.6% | 18.3% | 1.7% |
| CAPEX, % of revenue | 2.5% | 2.1% | 3.0% | 2.1% | 1.7% | -0.4% |
|
|---|
| ROIC | 16.4% | 17.3% | 20.0% | 23.3% | 25.1% | 1.7% |
| ROE | 24.8% | 29.4% | 41.3% | 66.6% | 76.2% | 9.6% |
| Net Debt/EBITDA | 2.5x | 2.3x | 2.8x | 2.5x | 2.2x | -0.3x |
| Interest coverage ratio (ICR) | 6.4x | 6.9x | 6.6x | | |
| Interest expence / Average debt | 4.7% | 4.4% | 4.6% | | | |
People
|
|---|
| Insider ownership | 3.0% | 3.0% | 3.0% | | | |
| Employees | 3,088 | 3,299 | 3,668 | | | |
| Revenue/Employee, th. $ | 285 | 283 | 281 | | | |
Fair Isaac Corporation ($FICO) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 299 | 308 | 314 | 374 | | 13.9% | 10.8% | -0.1% | 22.7% |
| EBITDA | 65 | 90 | 97 | 98 | | 14.3% | 60.6% | 2.8% | 26.0% |
| Net Income | 55 | 58 | 64 | 59 | | 37.3% | 76.6% | 0.1% | 7.5% |
Balance Sheet
|
|---|
| Cash | 111 | 109 | 126 | 157 | | 39.0% | 41.5% | 59.1% | 48.5% |
| Short Term Debt | 199 | 228 | 213 | 120 | | -12.6% | 4.5% | -2.2% | -45.0% |
| Long Term Debt | 824 | 816 | 819 | 816 | | 36.4% | 35.1% | 35.4% | 34.4% |
Ratios
|
|---|
| Gross Margin | 69.6% | 71.4% | 71.8% | 75.0% | | -1.4% | 2.4% | -0.2% | 4.0% |
| EBITDA Margin | 21.8% | 29.2% | 30.8% | 26.2% | | 0.1% | 9.1% | 0.9% | 0.7% |
| Net Income Margin | 18.4% | 18.9% | 20.4% | 15.8% | | 3.1% | 7.1% | 0.0% | -2.2% |
Peers in Application Software
Below you can find Fair Isaac Corporation benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.7% |
|---|
| Fair Isaac Corporation ($FICO) | - | 5.8% | 10.8% | 12.4% | 11.6% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Fair Isaac Corporation ($FICO) | 69.9% | 69.2% | 69.9% | 71.0% | 72.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| Fair Isaac Corporation ($FICO) | 22.8% | 22.9% | 22.9% | 24.6% | 27.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 3.0% | 2.6% |
|---|
| Fair Isaac Corporation ($FICO) | 2.5% | 2.1% | 3.0% | 2.1% | 1.7% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.8% | -11.8% | -10.6% | -4.5% | -2.2% |
|---|
| Fair Isaac Corporation ($FICO) | 16.4% | 17.3% | 20.0% | 23.3% | 25.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.9x | -0.7x | 0.4x | 0.0x |
|---|
| Fair Isaac Corporation ($FICO) | 2.5x | 2.3x | 2.8x | 2.5x | 2.2x |
