Fair Isaac Corp. (NYSE:FICO)

The analysis of the annual current and deferred income tax expenses over the reported periods reveals notable fluctuations and trends that impact the overall provision for income taxes.

Current Income Tax Expense

The current tax expense shows a general upward trend from 2019 through 2023, beginning at 16,247 thousand US dollars in 2019 and peaking at 171,627 thousand US dollars in 2023. This nearly tenfold increase over five years indicates substantially higher taxable income or changes in tax rates or regulations affecting current tax obligations. In 2024, the current tax expense slightly decreases to 156,544 thousand US dollars but remains significantly elevated relative to the earlier years, suggesting a potential stabilization or reduction in taxable income or benefits from tax planning strategies.

Deferred Income Tax Expense

The deferred tax expense displays considerable volatility and fluctuates between positive and negative values throughout the period. It starts with a positive 7,701 thousand US dollars in 2019, turning negative in 2020 (-8,639 thousand) and 2021 (-5,955 thousand), then reverses to a positive 7,816 thousand in 2022. The years 2023 and 2024 show substantial negative deferred tax expenses of -47,378 thousand and -27,330 thousand US dollars, respectively. This oscillation suggests varying timing differences between accounting income and taxable income, likely influenced by changes in temporary differences, tax loss carryforwards, or adjustments in tax rate assumptions.

Provision for Income Taxes

The total provision for income taxes, which combines current and deferred components, exhibits a consistent increase over the analyzed periods except for a moderate dip in 2020. Starting at 23,948 thousand in 2019, the provision decreases slightly to 20,589 thousand in 2020 before sharply rising to 81,058 thousand in 2021, followed by further increases reaching 129,214 thousand by 2024. This overall growth aligns primarily with the sharp increase in current tax expenses, partially offset by fluctuating deferred tax impacts. The rising trend in total tax provision indicates growing tax liabilities, which could be a result of increasing profitability or changes in tax regulations.

In conclusion, the data indicate a significant increase in current income tax expenses over time, pointing to higher taxable income or tax charges. Deferred tax expense behavior is irregular and suggests dynamic adjustments and timing impacts affecting the tax provision. The total provision for income taxes aligns with these trends, showing an overall increase, reflecting a growing tax expense burden in recent years.

U.S. Federal Statutory Income Tax Rate

The U.S. federal statutory income tax rate remained stable over the period from 2019 to 2024, consistently at 21%. This indicates no legislative changes affecting the statutory tax rate during these years.

Effective Income Tax Rate

The effective income tax rate exhibited variability over the observed periods. Starting at 11.08% in 2019, it decreased to a low of 8.01% in 2020, suggesting possibly favorable tax treatments or adjustments during that year.

From 2020 onwards, the effective tax rate showed an upward trend, rising significantly to 17.13% in 2021 and increasing further to 20.74% in 2022. It peaked at 22.44% in 2023, surpassing the statutory rate, before slightly declining to 20.13% in 2024, yet remaining close to the statutory rate.

This pattern suggests fluctuations in tax planning, deferred tax items, or changes in the geographic or operational mix affecting the tax expense. The movement towards the statutory rate over time indicates a normalization or reduction in tax preferences or credits previously impacting the effective rate.

Loss and Credit Carryforwards

There is a clear downward trend from 2019 to 2024, with the balance decreasing from 26,702 thousand USD in 2019 to 7,717 thousand USD in 2024. This suggests a reduction in the amount of losses and credits the company can carry forward, possibly indicating improved profitability or utilization of these assets over time.

Compensation Benefits

The expense for compensation benefits shows a gradual increase over the six-year period, from 23,931 thousand USD in 2019 to 32,093 thousand USD in 2024. This steady rise reflects increasing personnel costs possibly due to workforce expansion or wage inflation.

Operating Lease Liabilities

Starting from no data in 2019, the operating lease liabilities increase sharply in 2020 at 21,827 thousand USD, then steadily decline to 7,881 thousand USD in 2024. This pattern indicates an initial recognition of lease obligations followed by gradual amortization or lease expirations.

Research and Development Costs

Data is available only for 2023 and 2024, showing a significant increase from 34,730 thousand USD to 67,795 thousand USD. This doubling indicates a substantial intensification of investment in research and development activities.

Other Assets

Other assets display a fluctuating but generally upward pattern, rising from 9,393 thousand USD in 2019 to 18,241 thousand USD in 2024, with some volatility, especially a peak in 2021. The increase suggests growth in miscellaneous asset categories, contributing to the asset base.

Deferred Tax Assets, Gross

Gross deferred tax assets have increased overall from 60,026 thousand USD in 2019 to 133,727 thousand USD in 2024, with a dip in 2022 before resuming growth. This trend reveals an expanding deferred tax asset base, possibly related to timing differences in income recognition or tax credits.

Valuation Allowance

The valuation allowance becomes more negative from -19,231 thousand USD in 2019 to a peak negative of -28,403 thousand USD in 2021 but then moves toward zero by 2023 and is missing in 2024. This suggests a reduction in the valuation allowance, improving the net realization of deferred tax assets.

Deferred Tax Assets

Net deferred tax assets show growth from 40,795 thousand USD in 2019 to 133,727 thousand USD in 2024, with some fluctuations notably a drop in 2022. This increase points to a stronger deferred tax position after adjusting for valuation allowances.

Intangible Assets

Negative values throughout, with fluctuations between -15,114 thousand USD in 2019 and -7,812 thousand USD in 2024, showing a reduction in the net intangible asset balance but with irregular movements. This could reflect amortization or impairment adjustments.

Deferred Commission

Deferred commission is consistently negative and increases in magnitude from -7,920 thousand USD in 2019 to -14,484 thousand USD in 2024, indicating growing deferred expenses related to commissions, likely reflecting expanded sales activity or contract terms.

Operating Lease Right-of-Use Assets

Data starting in 2020 shows a decline from -13,719 thousand USD to -7,240 thousand USD in 2024. This decrease corresponds with the declining lease liabilities, suggesting systematic amortization of right-of-use assets.

Other Liabilities

Negative balances increase in absolute value from -11,755 thousand USD in 2019 to -17,678 thousand USD in 2024, with some fluctuations. This growing liability position may reflect increased obligations in miscellaneous categories.

Deferred Tax Liabilities

Deferred tax liabilities grow from -34,789 thousand USD in 2019 to -47,214 thousand USD in 2024, showing fluctuations but an overall increase in deferred tax obligations.

Deferred Tax Assets (Liabilities), Net

The net figure moves from a positive 6,006 thousand USD in 2019 to 86,513 thousand USD in 2024, generally increasing with a notable jump in 2023. This indicates a strengthening net deferred tax position, reflecting the combined effects of gross deferred tax assets and liabilities.

Deferred Tax Assets Trend

The deferred tax assets exhibit a volatile yet overall increasing trend from 2019 through 2024. Starting at 6,006 thousand US dollars in 2019, the value more than doubled by 2020, reaching 14,629 thousand US dollars. The upward movement continued into 2021, with deferred tax assets hitting 20,549 thousand US dollars.

However, a notable decline occurred in 2022, when the deferred tax assets dropped sharply to 11,803 thousand US dollars, representing a contraction of about 43% from the previous year. This decrease suggests a temporary reduction in anticipated tax benefits or changes in the company's tax position during that period.

From 2022 onwards, the deferred tax assets experienced significant recovery and growth. By 2023, the balance more than quintupled compared to the prior year, reaching 59,136 thousand US dollars. This surge continued into 2024, with deferred tax assets climbing further to 86,513 thousand US dollars, marking the highest value in the series and an approximate 46% year-over-year increase.

The marked rise in deferred tax assets in the last two periods could be indicative of enhanced future deductible temporary differences, possibly due to changes in accounting estimates, tax planning strategies, or increased recognition of tax loss carryforwards. The overall pattern reflects fluctuating but substantially growing deferred tax assets over the six-year span, highlighting a dynamic tax position that may influence future cash flows and tax obligations.

The data reveals several notable trends in the financial position and performance over the six-year period ending in 2024.

Total Assets

Reported total assets show a general upward trend, increasing from $1,433,448 thousand in 2019 to $1,717,884 thousand in 2024, despite some fluctuations in intermediate years. Adjusted total assets follow a similar pattern, rising from $1,427,442 thousand to $1,631,371 thousand over the same period, indicating consistency between reported and adjusted asset values, with a slight adjustment downward relative to reported figures.

Stockholders’ Equity (Deficit)

Reported stockholders’ equity demonstrates considerable volatility with a marked decline into negative territory starting in 2021. It decreased from a positive $289,767 thousand in 2019 to a negative $962,679 thousand in 2024. Adjusted equity mirrors this pattern, beginning at $283,761 thousand in 2019 and falling to a more pronounced negative $1,049,192 thousand by 2024. This trend suggests increasing deficits and potential financial stress related to equity during these years, with adjustments worsening the reported figures.

Net Income

Reported net income shows a generally positive performance trend, growing from $192,124 thousand in 2019 to $512,811 thousand in 2024, despite a slight dip in 2022. Adjusted net income displays a similar trajectory with some differences: it increases from $199,825 thousand in 2019 to a peak near $386,129 thousand in 2021, dips modestly afterward, and then rises again to $485,481 thousand in 2024. The adjustments to net income tend to moderate the peaks and valleys observed in reported earnings but maintain the overall upward trend.

In summary, the asset base has expanded steadily, reflecting growth or acquisitions, while stockholders' equity has deteriorated significantly, indicating increasing accumulated losses or liabilities exceeding equity. Net income growth remains robust but adjusted figures suggest some smoothing effects and potentially lower profitability in certain years. The divergence between growing assets and declining equity warrants attention to the underlying causes impacting financial stability.

The data indicates several notable trends in financial performance over the examined periods, focusing on profitability, efficiency, and leverage metrics.

Profit Margins

The reported net profit margin shows a generally upward trend from 16.56% in 2019 to 29.86% in 2024, with the most significant increase occurring between 2020 and 2021. The adjusted net profit margin follows a similar pattern but exhibits a slight decline in 2023 before recovering in 2024. This suggests improving profitability with some fluctuations when accounting for deferred or adjusted tax impacts.

Total Asset Turnover

The reported total asset turnover remains stable at 0.81 for 2019 and 2020, then increases gradually to 1.00 by 2024. The adjusted total asset turnover mirrors this pattern but shows slightly higher values in the last two years, reaching 1.05 in 2024. This reflects enhanced efficiency in generating revenue from assets over time, especially when adjustments are considered.

Financial Leverage

Financial leverage data is available only for 2019 and 2020. Both reported and adjusted leverage ratios decrease slightly from approximately 5.0 in 2019 to just below 4.9 in 2020. The absence of later data prevents trend analysis beyond 2020; however, the initial decline could indicate a modest reduction in reliance on debt financing during that period.

Return on Equity (ROE)

Reported and adjusted ROE figures are provided only for 2019 and 2020. Both measures increase from around 66-70% in 2019 to approximately 71% in 2020. This suggests improved effectiveness in generating returns for shareholders during the early years, although the lack of subsequent data limits further analysis.

Return on Assets (ROA)

Reported ROA shows strong positive movement from 13.4% in 2019 to nearly 30% in 2024, indicating a substantial improvement in asset profitability. Adjusted ROA follows a comparable trajectory but notes a dip in 2023 before rebounding in 2024. The trends reveal consistent enhancements in asset utilization to generate profit, with minor fluctuations potentially due to adjusting for deferred income taxes.

In summary, the financial data reveals a clear pattern of increasing profitability and operational efficiency over the analyzed period, with rising net profit margins, asset turnover, and return on assets. The available leverage and equity return figures suggest early improvements in capital structure management, though missing data for later years limits comprehensive long-term evaluation. Adjusted values generally parallel reported figures but tend to smooth some fluctuations, highlighting the effect of tax-related adjustments on reported financial performance.

The data reveals an overall upward trend in both reported and adjusted net income over the six-year period ending September 30, 2024. Reported net income increased from $192,124 thousand in 2019 to $512,811 thousand in 2024, representing a growth of approximately 167%. Adjusted net income also rose significantly, from $199,825 thousand in 2019 to $485,481 thousand in 2024, although the growth rate here was slightly lower compared to the reported figures.

Examining net profit margins, the reported net profit margin shows a general positive trajectory, rising from 16.56% in 2019 to 29.86% in 2024. This indicates an improvement in profitability relative to revenue over the period. The adjusted net profit margin also displays growth, but with more variability. It increased from 17.23% in 2019 to a peak of 29.33% in 2021, dipped to 25.24% in 2023, and then rebounded to 28.27% in 2024.

The patterns suggest that reported net figures have consistently improved, reflecting either higher income, better tax management, or both. The adjusted net income and margins, which account for deferred income tax adjustments, show a similar trajectory but highlight some volatility, particularly in margin performance between 2021 and 2023. The dip in adjusted net profit margin in 2023 could indicate specific tax adjustments or one-time impacts affecting profitability that year, which were less pronounced in the reported figures.

Overall, the company demonstrates strong growth in earnings capacity and profitability, with reported results becoming increasingly favorable and adjusted results indicating some fluctuations likely related to tax adjustments. The upward trend in both income and margins towards 2024 points to improved financial performance and operational efficiency.

The analysis of the company's reported and adjusted financial data over the six-year period reveals several notable trends in asset values and their utilization efficiency.

Total Assets

The reported total assets showed an overall upward trend, rising from approximately $1.43 billion in 2019 to nearly $1.72 billion in 2024. Although there was a slight decline between 2021 and 2022, the trend resumed its growth trajectory thereafter. Adjusted total assets, which account for income tax effects, mirrored this pattern but consistently presented slightly lower values than the reported assets. The adjusted assets increased from about $1.43 billion in 2019 to approximately $1.63 billion in 2024, reflecting a steady recovery and growth post-2022 dip.

Total Asset Turnover

The reported total asset turnover ratio remained stable at 0.81 from 2019 to 2020, followed by a gradual upward trend reaching 1.00 by 2024. This indicates improving efficiency in using assets to generate revenue. The adjusted total asset turnover ratios also corroborate this pattern, starting at 0.81, increasing steadily to 1.05 in 2024. The adjusted ratios showed a more pronounced improvement than the reported ones, particularly from 2022 onward, suggesting that income tax adjustments provide a clearer indication of enhanced asset productivity.

General Insights

The general pattern observed is that despite fluctuations in total asset values, the company's ability to utilize these assets to generate revenue has improved progressively over the period. The upward trend in turnover ratios suggests operational efficiency gains. The adjustments for deferred income tax slightly reduce the asset base but portray a more optimistic perspective on asset utilization efficiency, especially in the latest reporting periods.

The data reveals several notable trends pertaining to the company's assets, stockholders’ equity, and financial leverage over the six-year period ending September 30, 2024.

Total Assets

Both reported and adjusted total assets exhibit a general upward trend. Reported total assets increased from approximately 1.43 billion USD in 2019 to about 1.72 billion USD in 2024, showing some fluctuations in intermediate years but overall growth. Adjusted total assets follow a similar pattern, rising from around 1.43 billion USD in 2019 to roughly 1.63 billion USD in 2024, indicating that adjustments do not significantly alter the growth trajectory.

Stockholders’ Equity (Deficit)

In contrast to total assets, the stockholders’ equity figures display a downward trend, turning sharply negative from 2021 onwards. Reported stockholders’ equity was positive and growing from approximately 290 million USD in 2019 to 331 million USD in 2020. However, it deteriorated drastically thereafter, moving to a negative position of about -111 million USD in 2021 and further deteriorating to nearly -963 million USD by 2024. Adjusted equity follows a similar pattern but indicates slightly larger negative values from 2021, with a deficit increasing to over -1 billion USD in 2024. This negative trend highlights significant declines in net asset value over the latter part of the period.

Financial Leverage Ratios

Financial leverage ratios are only available for the initial two years. Reported financial leverage decreased slightly from 4.95 in 2019 to 4.85 in 2020. The adjusted financial leverage remained constant at 5.03 for both years. The absence of data in subsequent years limits the ability to assess leverage trends over the full timeframe, but the initial figures suggest a relatively stable leverage position before the noticeable deterioration in equity.

Overall, the data depicts a company experiencing steady growth in total asset base but simultaneously undergoing a significant decline in equity, moving into substantial deficits starting in 2021. While the increasing asset base could signal expansion or investment, the sharp equity decline points to considerable challenges impacting retained earnings or increased liabilities. The available leverage data indicates modest leverage levels initially, but lack of later data constrains a full understanding of how leverage evolved amid the worsening equity position.

The financial data reveals significant variations in both net income and stockholders’ equity over the analyzed periods. Reported net income shows a general upward trajectory from 192,124 thousand US dollars in 2019 to 512,811 thousand US dollars in 2024, indicating strong earnings growth. Adjusted net income follows a similar pattern, increasing from 199,825 thousand US dollars in 2019 to 485,481 thousand US dollars in 2024, although the adjusted figures are slightly lower than the reported values in most years after 2020.

Stockholders’ equity, however, demonstrates a contrasting trend. Both reported and adjusted equity values start positive in 2019 and 2020 but shift to substantial deficits starting 2021. Reported stockholders’ equity declines sharply from 331,082 thousand US dollars in 2020 to a deficit of 962,679 thousand US dollars by 2024. Similarly, adjusted stockholders’ equity turns negative in 2021 and continues to worsen, reaching a deficit exceeding one million US dollars by 2024. These large negative equity figures suggest considerable liabilities or adjustments impacting the company’s net asset position.

Regarding return on equity (ROE), data is only available for 2019 and 2020. Reported ROE increases from 66.3% to 71.41%, while adjusted ROE rises slightly from 70.42% to 71.98%. These elevated ROE values reflect a strong return relative to equity during these periods; however, the absence of data for subsequent years could be related to the transition from positive equity to significant deficits, which would complicate the calculation or interpretation of ROE.

In summary, the company has demonstrated continuous growth in net income, both reported and adjusted, over the six-year span. Contrasting this, stockholders’ equity shifts markedly from positive to significantly negative territory beginning in 2021, pointing to underlying financial challenges or accounting adjustments affecting shareholders’ equity. The limited ROE data suggests high profitability relative to equity in the initial years but is unavailable during periods of negative equity, limiting the ability to assess return metrics in those later years.

Net Income Trends

Shows strong and consistent growth from 2019 through 2024, with both reported and adjusted measures rising substantially.

Stockholders’ Equity Trends

Transitions from positive values in 2019-2020 to large negative deficits from 2021 onwards, indicating significant financial or accounting impacts.

Return on Equity

High reported and adjusted ROE in 2019 and 2020, with no data in later years likely due to negative equity impeding calculation.

The financial performance and position over the six reported years exhibit several noteworthy trends and patterns. Both reported and adjusted net income reveal substantial growth, reflecting robust profitability improvements. The reported net income rose from $192.1 million in 2019 to $512.8 million by 2024, representing an increase of approximately 167%. The adjusted net income, which accounts for deferred income tax adjustments, similarly shows growth from $199.8 million to $485.5 million, although it demonstrates a somewhat less pronounced rise between 2021 and 2023 compared to reported figures.

Total assets, both reported and adjusted, experienced fluctuations but generally trended upward. Reported total assets increased from roughly $1.43 billion in 2019 to $1.72 billion in 2024, with a dip noted in 2022 before recovering in subsequent years. Adjusted total assets mirrored this pattern, decreasing slightly in 2022 but recovering and reaching about $1.63 billion in 2024. This suggests a degree of asset base volatility possibly associated with adjustments or revaluations for deferred taxes, but overall asset growth supports expanding operations or investments.

Return on Assets (ROA)

Reported ROA steadily improved from 13.4% in 2019 to 29.85% in 2024. The rise indicates enhanced asset profitability and operational efficiency over the period, with the most significant improvement occurring between 2020 and 2021 and continuing upward thereafter.

The adjusted ROA follows a similar upward trend, starting at 14.0% in 2019 and increasing to 29.76% by 2024. Mild divergence is observed in the intermediate years, particularly in 2023, where adjusted ROA dips marginally relative to the reported figure, likely reflecting the impact of deferred tax adjustments on earnings performance metrics.

Overall, the data indicate strong financial growth and increasing efficiency from 2019 to 2024. The higher reported net income growth compared to adjusted net income in certain periods suggests timing differences or tax effects impacting deferred income tax accounting. Asset growth is positive but less pronounced relative to income growth, contributing to stronger returns on assets. The consistent rise in both reported and adjusted ROA underscores ongoing improvement in how effectively assets generate profit. Despite some minor fluctuations in asset values and adjusted earnings, the general trend reflects enhanced profitability and sound financial health over the analyzed time frame.