Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Fair Isaac Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 589,082 – 20.20% × 1,416,757 = 302,967
The financial performance from 2019 to 2024 is characterized by a significant transition from value destruction to substantial value creation. Economic profit shifted from a negative position of US$ -32,578 thousand in 2019 to a positive US$ 302,967 thousand by 2024, indicating that the organization has successfully moved toward generating returns that exceed its cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A consistent and strong upward trend is observed in NOPAT, which increased from US$ 238,184 thousand in 2019 to US$ 589,082 thousand in 2024. This growth reflects a steady improvement in operational profitability, with the most significant year-over-year acceleration occurring between 2020 and 2021.
- Invested Capital and Asset Productivity
- Invested capital remained relatively stable throughout the period, fluctuating within a narrow range between US$ 1,329,445 thousand and US$ 1,445,030 thousand. The fact that NOPAT grew substantially while invested capital remained nearly flat indicates a marked increase in capital efficiency and an improved return on invested capital.
- Cost of Capital Stability
- The cost of capital exhibited minimal volatility, maintaining a range between 18.49% and 20.20%. Because the hurdle rate remained consistent, the expansion in economic profit is attributable to operational growth and efficiency gains rather than a reduction in the cost of financing or a change in the risk profile.
- Economic Profit Trajectory
- Economic profit remained negative through 2020, suggesting that the company was not covering its cost of capital during those years. A pivotal shift occurred in 2021, when economic profit turned positive at US$ 150,291 thousand. This positive trajectory accelerated through 2024, demonstrating a sustained ability to create economic value.
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Net Operating Profit after Taxes (NOPAT)
Fair Isaac Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring accruals.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 33,518 × 6.41% = 2,149
7 2024 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 107,787 × 21.00% = 22,635
8 Addition of after taxes interest expense to net income.
- Net Income
- The net income exhibits a consistent upward trend over the six-year period. Starting at 192,124 thousand USD in September 2019, it increased to 236,411 thousand USD in 2020 and then surged to 392,084 thousand USD in 2021. Although a slight decline occurred in 2022 to 373,541 thousand USD, the net income rebounded in the following years, reaching 429,375 thousand USD in 2023 and further rising to 512,811 thousand USD in 2024. Overall, net income more than doubled from 2019 to 2024, indicating strong profitability growth with only a minor setback in 2022.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT shows a robust increasing pattern throughout the same timeframe. Starting at 238,184 thousand USD in 2019, it steadily rose each year, reaching 279,157 thousand USD in 2020, and notably increasing to 407,349 thousand USD in 2021. The upward trajectory continued in 2022 with 445,701 thousand USD, followed by further growth to 476,369 thousand USD in 2023, and culminating at 589,082 thousand USD in 2024. The consistent annual growth in NOPAT reflects improved operating efficiency and profitability after tax considerations.
- Trend Analysis
- Both net income and NOPAT demonstrate strong expanding trends, suggesting effective operational management and increasing earnings capacity over the years analyzed. While net income experienced a minor dip in 2022, it recovered promptly in subsequent years, maintaining an upward direction. The continuous growth in NOPAT supports the view of enhanced operational success independent of non-operating influences. The increase in these profitability measures indicates sustained financial strength and improved returns from core business activities.
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Cash Operating Taxes
Fair Isaac Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
- Provision for Income Taxes
- The provision for income taxes exhibits a general upward trend over the analyzed periods. Starting at $23,948 thousand in September 2019, it decreased slightly in 2020 to $20,589 thousand but then rose significantly to $81,058 thousand in 2021. This upward momentum continued with increases to $97,768 thousand in 2022, $124,249 thousand in 2023, and $129,214 thousand in 2024. The data suggests heightened tax liabilities, particularly from 2021 onward, indicating either increased profitability or changes in tax rates or accounting practices.
- Cash Operating Taxes
- Cash operating taxes show a more volatile pattern compared to the provision for income taxes. Starting at $25,518 thousand in 2019, there is a noticeable increase to $38,863 thousand in 2020. A substantial jump occurred in 2021 to $96,011 thousand, followed by a further increase to $104,928 thousand in 2022. The highest cash operating taxes were recorded in 2023 at $192,079 thousand, nearly doubling the previous year. However, in 2024, a decline to $179,179 thousand is observed. This volatility might reflect timing differences in tax payments, changes in taxable income, or cash flow management strategies related to tax obligations.
- Comparative Insights
- While both provisions and cash operating taxes generally trend upward, the cash taxes demonstrate more pronounced fluctuations with a peak in 2023 followed by a reduction in 2024. The provision for income taxes increases steadily, which may imply growing profitability or an accounting recognition of tax expenses more consistently aligned with earnings. The disparity between the two measures could indicate temporary differences in tax expense recognition and actual tax payments over the periods analyzed.
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Invested Capital
Fair Isaac Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of restructuring accruals.
6 Addition of equity equivalents to stockholders’ equity (deficit).
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases have shown a consistent upward trend over the six-year period. Starting at approximately 928 million USD in 2019, the value increased steadily each year, with a notable acceleration between 2020 and 2022. By 2024, the debt and lease obligations reached roughly 2.25 billion USD, more than doubling the initial amount. This indicates an increasing reliance on debt financing or lease commitments.
- Stockholders’ Equity (Deficit)
- Stockholders’ equity experienced significant fluctuations over the period. Initially positive, it grew from about 290 million USD in 2019 to 331 million USD in 2020. However, from 2021 onward, equity turned negative and continued to deteriorate, reaching a deficit of nearly 963 million USD in 2024. The negative equity values suggest sustained losses or significant reductions in net assets during these years.
- Invested Capital
- Invested capital exhibited moderate variability but remained relatively stable compared to the other metrics. Starting at approximately 1.4 billion USD in 2019, it experienced a slight decline in the following years, bottoming out near 1.33 billion USD by 2022. Subsequently, invested capital showed a gradual increase, ending at about 1.42 billion USD in 2024. This relative stability indicates that the underlying capital investment base has not changed dramatically despite fluctuations in debt and equity.
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Cost of Capital
Fair Isaac Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 50,902,456) | 50,902,456) | ÷ | 53,128,631) | = | 0.96 | 0.96 | × | 20.90% | = | 20.02% | ||
| Debt and finance lease liabilities3 | 2,192,657) | 2,192,657) | ÷ | 53,128,631) | = | 0.04 | 0.04 | × | 5.19% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 33,518) | 33,518) | ÷ | 53,128,631) | = | 0.00 | 0.00 | × | 6.41% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 53,128,631) | 1.00 | 20.20% | ||||||||||
Based on: 10-K (reporting date: 2024-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 23,241,370) | 23,241,370) | ÷ | 25,044,659) | = | 0.93 | 0.93 | × | 20.90% | = | 19.39% | ||
| Debt and finance lease liabilities3 | 1,763,050) | 1,763,050) | ÷ | 25,044,659) | = | 0.07 | 0.07 | × | 5.10% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 40,239) | 40,239) | ÷ | 25,044,659) | = | 0.00 | 0.00 | × | 4.58% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 25,044,659) | 1.00 | 19.68% | ||||||||||
Based on: 10-K (reporting date: 2023-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 11,083,430) | 11,083,430) | ÷ | 12,859,541) | = | 0.86 | 0.86 | × | 20.90% | = | 18.01% | ||
| Debt and finance lease liabilities3 | 1,717,550) | 1,717,550) | ÷ | 12,859,541) | = | 0.13 | 0.13 | × | 4.38% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 58,561) | 58,561) | ÷ | 12,859,541) | = | 0.00 | 0.00 | × | 4.01% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 12,859,541) | 1.00 | 18.49% | ||||||||||
Based on: 10-K (reporting date: 2022-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,631,730) | 10,631,730) | ÷ | 12,035,474) | = | 0.88 | 0.88 | × | 20.90% | = | 18.46% | ||
| Debt and finance lease liabilities3 | 1,328,000) | 1,328,000) | ÷ | 12,035,474) | = | 0.11 | 0.11 | × | 3.26% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 75,744) | 75,744) | ÷ | 12,035,474) | = | 0.01 | 0.01 | × | 3.64% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 12,035,474) | 1.00 | 18.76% | ||||||||||
Based on: 10-K (reporting date: 2021-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 13,435,210) | 13,435,210) | ÷ | 14,432,216) | = | 0.93 | 0.93 | × | 20.90% | = | 19.45% | ||
| Debt and finance lease liabilities3 | 901,012) | 901,012) | ÷ | 14,432,216) | = | 0.06 | 0.06 | × | 4.28% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 95,994) | 95,994) | ÷ | 14,432,216) | = | 0.01 | 0.01 | × | 3.86% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 14,432,216) | 1.00 | 19.69% | ||||||||||
Based on: 10-K (reporting date: 2020-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 9,603,381) | 9,603,381) | ÷ | 10,565,222) | = | 0.91 | 0.91 | × | 20.90% | = | 19.00% | ||
| Debt and finance lease liabilities3 | 864,545) | 864,545) | ÷ | 10,565,222) | = | 0.08 | 0.08 | × | 4.52% × (1 – 21.00%) | = | 0.29% | ||
| Operating lease liability4 | 97,296) | 97,296) | ÷ | 10,565,222) | = | 0.01 | 0.01 | × | 4.52% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 10,565,222) | 1.00 | 19.32% | ||||||||||
Based on: 10-K (reporting date: 2019-09-30).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Fair Isaac Corp., economic spread ratio calculation, comparison to benchmarks
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 302,967) | 206,295) | 199,906) | 150,291) | (5,312) | (32,578) | |
| Invested capital2 | 1,416,757) | 1,372,115) | 1,329,445) | 1,370,014) | 1,445,030) | 1,401,400) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 21.38% | 15.03% | 15.04% | 10.97% | -0.37% | -2.32% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | 0.24% | 1.02% | 3.89% | 5.71% | 6.31% | — | |
| Adobe Inc. | 0.80% | 0.97% | 6.46% | 8.84% | 1.12% | — | |
| AppLovin Corp. | 0.55% | -20.58% | -26.78% | -30.15% | — | — | |
| Cadence Design Systems Inc. | -2.88% | 7.17% | 6.58% | 6.80% | — | — | |
| Datadog Inc. | -9.56% | -6.08% | -11.83% | -4.01% | — | — | |
| International Business Machines Corp. | -7.57% | -3.53% | -11.28% | -6.14% | — | — | |
| Intuit Inc. | -6.59% | -8.64% | -7.53% | 0.10% | — | — | |
| Microsoft Corp. | 7.47% | 10.51% | 18.50% | 27.54% | — | — | |
| Oracle Corp. | -7.92% | -8.73% | -7.70% | 0.51% | — | — | |
| Palantir Technologies Inc. | -12.34% | -9.06% | -32.80% | -40.26% | — | — | |
| Palo Alto Networks Inc. | 5.34% | 11.47% | 3.50% | -5.19% | — | — | |
| Salesforce Inc. | -14.32% | -17.76% | -14.64% | -12.49% | — | — | |
| ServiceNow Inc. | 5.94% | 5.24% | 0.73% | 1.95% | — | — | |
| Synopsys Inc. | -8.18% | -7.48% | -0.88% | -6.91% | -6.71% | — | |
| Workday Inc. | -13.07% | -19.29% | -14.12% | -19.37% | — | — | |
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 302,967 ÷ 1,416,757 = 21.38%
4 Click competitor name to see calculations.
The financial performance from September 30, 2019, to September 30, 2024, demonstrates a significant transition from economic value destruction to substantial value creation. A consistent upward trajectory in economic profit is observed, coinciding with a sharp improvement in the economic spread ratio, while the invested capital base remained relatively stable throughout the period.
- Economic Profit Trend
- A reversal in economic profit occurred between 2020 and 2021. Initial negative values of -32,578 thousand USD in 2019 and -5,312 thousand USD in 2020 shifted to a positive 150,291 thousand USD by 2021. This growth accelerated through 2024, reaching a peak of 302,967 thousand USD, indicating a strong capacity to generate returns exceeding the company's cost of capital.
- Invested Capital Stability
- Invested capital exhibited minimal volatility, fluctuating within a narrow range between 1.329 billion USD and 1.445 billion USD. The stability of the capital base suggests that the growth in economic profit was not driven by an increase in capital deployment, but rather by enhanced operational efficiency and higher returns on existing assets.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a profound improvement in value generation. The ratio moved from a negative 2.32% in 2019 to a positive 21.38% by 2024. The most significant leap occurred between 2020 and 2021, where the ratio shifted from -0.37% to 10.97%. This progression indicates a widening margin between the return on invested capital and the weighted average cost of capital, signifying a heightened level of economic efficiency.
Overall, the data indicates a high-growth phase in economic value added. The correlation between the steady invested capital and the rapidly increasing economic spread ratio suggests a successful optimization of the business model, resulting in an accelerated rate of wealth creation for shareholders.
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Economic Profit Margin
Fair Isaac Corp., economic profit margin calculation, comparison to benchmarks
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 302,967) | 206,295) | 199,906) | 150,291) | (5,312) | (32,578) | |
| Revenues | 1,717,526) | 1,513,557) | 1,377,270) | 1,316,536) | 1,294,562) | 1,160,083) | |
| Add: Increase (decrease) in deferred revenue | 16,974) | 16,675) | 15,797) | (11,378) | 5,821) | 8,202) | |
| Adjusted revenues | 1,734,500) | 1,530,232) | 1,393,067) | 1,305,158) | 1,300,383) | 1,168,285) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 17.47% | 13.48% | 14.35% | 11.52% | -0.41% | -2.79% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | 0.13% | 0.52% | 1.87% | 2.93% | 3.21% | — | |
| Adobe Inc. | 0.90% | 1.21% | 7.53% | 11.02% | 1.61% | — | |
| AppLovin Corp. | 0.54% | -28.17% | -50.15% | -60.37% | — | — | |
| Cadence Design Systems Inc. | -4.41% | 7.14% | 6.57% | 6.90% | — | — | |
| Datadog Inc. | -8.68% | -3.80% | -8.19% | -3.19% | — | — | |
| International Business Machines Corp. | -13.38% | -6.28% | -19.53% | -11.67% | — | — | |
| Intuit Inc. | -10.13% | -14.15% | -14.50% | 0.13% | — | — | |
| Microsoft Corp. | 10.44% | 11.97% | 17.73% | 22.86% | — | — | |
| Oracle Corp. | -15.08% | -16.89% | -14.14% | 1.01% | — | — | |
| Palantir Technologies Inc. | -10.70% | -4.86% | -55.03% | -66.31% | — | — | |
| Palo Alto Networks Inc. | 5.67% | 11.39% | 4.08% | -6.99% | — | — | |
| Salesforce Inc. | -33.09% | -44.91% | -40.63% | -28.65% | — | — | |
| ServiceNow Inc. | 4.89% | 4.22% | 0.59% | 1.69% | — | — | |
| Synopsys Inc. | -13.71% | -10.55% | -1.24% | -10.99% | -11.52% | — | |
| Workday Inc. | -14.55% | -23.67% | -19.14% | -25.28% | — | — | |
Based on: 10-K (reporting date: 2024-09-30), 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 302,967 ÷ 1,734,500 = 17.47%
3 Click competitor name to see calculations.
The analysis of economic value added reflects a significant transition from economic value destruction to substantial value creation over the six-year period ending September 30, 2024. A consistent upward trajectory is evident in both absolute economic profit and the associated margins, indicating a marked improvement in the ability to generate returns that exceed the cost of capital.
- Economic Profit Trajectory
- A stark reversal in economic performance occurred between 2019 and 2021. After recording deficits of 32.58 million USD in 2019 and 5.31 million USD in 2020, economic profit shifted to a positive 150.29 million USD in 2021. This growth continued through 2024, reaching 302.97 million USD, which demonstrates a comprehensive recovery and an accelerating capacity for value generation.
- Adjusted Revenue Growth
- Adjusted revenues demonstrated steady year-over-year expansion, increasing from 1.17 billion USD in 2019 to 1.73 billion USD in 2024. This consistent growth in the top line provided the necessary scale to support the transition from negative to positive economic profit.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the absolute profit trend, ascending from -2.79% in 2019 to a peak of 17.47% in 2024. Although a slight contraction was observed in 2023, where the margin decreased to 13.48% from 14.35%, the subsequent surge in 2024 indicates enhanced operational efficiency and a stronger correlation between revenue growth and economic value creation.
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