Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Fair Isaac Corp., ROIC 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) | |||||||
| Net operating profit after taxes (NOPAT)1 | 589,082) | 476,369) | 445,701) | 407,349) | 279,157) | 238,184) | |
| Invested capital2 | 1,416,757) | 1,372,115) | 1,329,445) | 1,370,014) | 1,445,030) | 1,401,400) | |
| Performance Ratio | |||||||
| ROIC3 | 41.58% | 34.72% | 33.53% | 29.73% | 19.32% | 17.00% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Accenture PLC | 20.33% | 21.14% | 23.93% | 25.83% | 26.30% | — | |
| Adobe Inc. | 21.19% | 21.68% | 26.93% | 29.44% | 21.67% | — | |
| AppLovin Corp. | 35.87% | 11.27% | -3.27% | 0.83% | — | — | |
| Cadence Design Systems Inc. | 14.27% | 24.69% | 23.98% | 24.26% | — | — | |
| Datadog Inc. | 10.63% | 14.64% | 8.75% | 16.66% | — | — | |
| International Business Machines Corp. | 4.46% | 7.72% | -0.61% | 3.86% | — | — | |
| Intuit Inc. | 10.69% | 8.53% | 9.30% | 17.64% | — | — | |
| Microsoft Corp. | 25.70% | 28.71% | 36.59% | 45.56% | — | — | |
| Oracle Corp. | 11.71% | 10.34% | 9.70% | 17.55% | — | — | |
| Palantir Technologies Inc. | 13.53% | 16.73% | -7.21% | -14.60% | — | — | |
| Palo Alto Networks Inc. | 23.08% | 28.59% | 19.73% | 11.48% | — | — | |
| Salesforce Inc. | 6.31% | 2.31% | 5.42% | 8.25% | — | — | |
| ServiceNow Inc. | 23.07% | 22.31% | 17.69% | 18.88% | — | — | |
| Synopsys Inc. | 10.31% | 11.03% | 17.54% | 11.52% | 11.63% | — | |
| Workday Inc. | 7.80% | 1.25% | 6.56% | 1.38% | — | — | |
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 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 589,082 ÷ 1,416,757 = 41.58%
4 Click competitor name to see calculations.
Fair Isaac Corp. has demonstrated a significant and consistent improvement in capital efficiency between fiscal years 2019 and 2024. The period is characterized by a substantial expansion in operating profitability achieved without a corresponding increase in the capital base.
- Net Operating Profit After Taxes (NOPAT)
- A strong and continuous upward trajectory is observed in NOPAT, which grew from US$ 238.2 million in 2019 to US$ 589.1 million in 2024. This represents a total increase of approximately 147% over the six-year period, indicating a robust growth in core operational earnings.
- Invested Capital
- Invested capital remained remarkably stable, oscillating within a narrow range throughout the period. After reaching a peak of US$ 1.45 billion in 2020, the capital base experienced a slight contraction to US$ 1.33 billion by 2022, before returning to US$ 1.42 billion in 2024. This stability suggests that the increase in profitability was not dependent on significant new capital injections or asset expansion.
- Return on Invested Capital (ROIC)
- ROIC expanded aggressively from 17.00% in 2019 to 41.58% in 2024. The divergence between the rapidly growing NOPAT and the stagnant invested capital drove a steady increase in the return generated per unit of capital. A particularly sharp acceleration in efficiency was noted between 2020 and 2021, where the ratio increased by 10.41 percentage points.
Overall, the analysis indicates a high degree of operational leverage, where the company has successfully scaled its profit generation while maintaining a lean capital structure, resulting in a more than twofold increase in the return on invested capital over the observed timeframe.
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Decomposition of ROIC
Fair Isaac Corp., decomposition of ROIC
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
Return on invested capital (ROIC) has exhibited a strong and consistent upward trajectory over the analyzed six-year period, rising from 17.00% in 2019 to 41.58% in 2024. This substantial expansion in capital returns is the result of significant improvements in operational efficiency and capital utilization, which have more than offset a declining trend in after-tax retention.
- Operating Profit Margin (OPM)
- The operating profit margin served as the primary driver of ROIC growth, nearly doubling from 22.57% in 2019 to 44.29% in 2024. A notable acceleration occurred between 2020 and 2021, where the margin expanded by over 1,400 basis points. This trend indicates a significant increase in operational profitability and cost management effectiveness over the period.
- Turnover of Capital (TO)
- Capital turnover shows a steady and linear increase, improving from 0.83 in 2019 to 1.22 in 2024. This progression reflects enhanced efficiency in generating revenue from the invested capital base, suggesting that the asset base is being utilized more productively to drive top-line growth.
- Effective Cash Tax Rate Impact (1 – CTR)
- In contrast to the operational metrics, the after-tax retention ratio (1 minus the effective cash tax rate) has generally declined, moving from 90.32% in 2019 to 76.68% in 2024. This downward trend indicates an increase in the effective tax burden over time, which acted as a moderate headwind to the overall ROIC.
The decomposition of the return on invested capital reveals that the growth in ROIC was fundamentally driven by the synergy between expanding profit margins and improved capital turnover. The operational gains achieved in OPM and TO were sufficiently robust to neutralize the negative impact of a rising effective cash tax rate, leading to a significant overall increase in the productivity of invested capital.
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Operating Profit Margin (OPM)
Fair Isaac Corp., OPM 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) | |||||||
| Net operating profit after taxes (NOPAT)1 | 589,082) | 476,369) | 445,701) | 407,349) | 279,157) | 238,184) | |
| Add: Cash operating taxes2 | 179,179) | 192,079) | 104,928) | 96,011) | 38,863) | 25,518) | |
| Net operating profit before taxes (NOPBT) | 768,262) | 668,448) | 550,629) | 503,360) | 318,020) | 263,703) | |
| 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) | |
| Profitability Ratio | |||||||
| OPM3 | 44.29% | 43.68% | 39.53% | 38.57% | 24.46% | 22.57% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Accenture PLC | 15.15% | 14.56% | 15.48% | 16.65% | 16.59% | — | |
| Adobe Inc. | 32.23% | 35.97% | 36.56% | 40.89% | 34.42% | — | |
| AppLovin Corp. | 40.17% | 20.43% | -1.60% | 5.23% | — | — | |
| Cadence Design Systems Inc. | 31.87% | 31.47% | 32.28% | 28.51% | — | — | |
| Datadog Inc. | 9.47% | 8.91% | 6.57% | 13.48% | — | — | |
| International Business Machines Corp. | 11.61% | 17.71% | 3.11% | 11.04% | — | — | |
| Intuit Inc. | 24.30% | 23.08% | 21.00% | 28.02% | — | — | |
| Microsoft Corp. | 45.67% | 43.20% | 43.28% | 43.49% | — | — | |
| Oracle Corp. | 30.01% | 26.91% | 24.11% | 40.03% | — | — | |
| Palantir Technologies Inc. | 11.18% | 9.03% | -8.42% | -23.57% | — | — | |
| Palo Alto Networks Inc. | 28.26% | 29.22% | 23.90% | 16.95% | — | — | |
| Salesforce Inc. | 19.05% | 8.46% | 16.42% | 20.31% | — | — | |
| ServiceNow Inc. | 20.13% | 18.76% | 14.87% | 17.20% | — | — | |
| Synopsys Inc. | 24.97% | 20.63% | 27.91% | 22.47% | 22.28% | — | |
| Workday Inc. | 8.65% | 3.29% | 8.82% | 2.23% | — | — | |
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 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 768,262 ÷ 1,734,500 = 44.29%
4 Click competitor name to see calculations.
A consistent upward trajectory in operating performance is observed from 2019 through 2024. While both adjusted revenues and net operating profit before taxes (NOPBT) have grown throughout the period, the growth in profitability has significantly outpaced the growth in revenue, resulting in a substantial expansion of the operating profit margin.
- Revenue Growth Patterns
- Adjusted revenues increased steadily from 1,168,285 thousand US$ in 2019 to 1,734,500 thousand US$ in 2024. This growth indicates a consistent expansion of the top line over the six-year period.
- Operating Profitability Trends
- NOPBT experienced aggressive growth, rising from 263,703 thousand US$ in 2019 to 768,262 thousand US$ in 2024. The increase in operating profit is nearly triple the initial 2019 value, far exceeding the proportional growth seen in adjusted revenues.
- Operating Profit Margin (OPM) Analysis
- The operating profit margin expanded from 22.57% in 2019 to 44.29% in 2024. A notable acceleration occurred between 2020 and 2021, where the margin jumped from 24.46% to 38.57%. Following this shift, the margin continued to climb steadily, reaching its peak in 2024.
- Operational Efficiency Insights
- The divergence between revenue growth and profit growth suggests significant improvements in operational efficiency or enhanced pricing power. The ability to expand the OPM by approximately 21.72 percentage points over five years indicates a highly effective scaling of operations where incremental revenues are being converted to operating profit at a much higher rate than in previous periods.
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Turnover of Capital (TO)
Fair Isaac Corp., TO 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) | |||||||
| 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) | |
| Invested capital1 | 1,416,757) | 1,372,115) | 1,329,445) | 1,370,014) | 1,445,030) | 1,401,400) | |
| Efficiency Ratio | |||||||
| TO2 | 1.22 | 1.12 | 1.05 | 0.95 | 0.90 | 0.83 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Accenture PLC | 1.76 | 1.94 | 2.08 | 1.95 | 1.97 | — | |
| Adobe Inc. | 0.88 | 0.80 | 0.86 | 0.80 | 0.70 | — | |
| AppLovin Corp. | 1.04 | 0.73 | 0.53 | 0.50 | — | — | |
| Cadence Design Systems Inc. | 0.65 | 1.00 | 1.00 | 0.98 | — | — | |
| Datadog Inc. | 1.10 | 1.60 | 1.45 | 1.26 | — | — | |
| International Business Machines Corp. | 0.57 | 0.56 | 0.58 | 0.53 | — | — | |
| Intuit Inc. | 0.65 | 0.61 | 0.52 | 0.79 | — | — | |
| Microsoft Corp. | 0.72 | 0.88 | 1.04 | 1.20 | — | — | |
| Oracle Corp. | 0.53 | 0.52 | 0.54 | 0.51 | — | — | |
| Palantir Technologies Inc. | 1.15 | 1.86 | 0.60 | 0.61 | — | — | |
| Palo Alto Networks Inc. | 0.94 | 1.01 | 0.86 | 0.74 | — | — | |
| Salesforce Inc. | 0.43 | 0.40 | 0.36 | 0.44 | — | — | |
| ServiceNow Inc. | 1.22 | 1.24 | 1.24 | 1.16 | — | — | |
| Synopsys Inc. | 0.60 | 0.71 | 0.71 | 0.63 | 0.58 | — | |
| Workday Inc. | 0.90 | 0.82 | 0.74 | 0.77 | — | — | |
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 Invested capital. See details »
2 2024 Calculation
TO = Adjusted revenues ÷ Invested capital
= 1,734,500 ÷ 1,416,757 = 1.22
3 Click competitor name to see calculations.
A consistent improvement in capital efficiency is observed between September 30, 2019, and September 30, 2024. The primary driver of this trend is a steady increase in adjusted revenues coupled with a relatively stagnant invested capital base, resulting in a continuous rise in the turnover of capital ratio.
- Adjusted Revenue Growth
- Revenues exhibited a persistent upward trend, increasing from US$ 1,168,285 thousand in 2019 to US$ 1,734,500 thousand in 2024. While growth was steady between 2019 and 2023, a more pronounced acceleration occurred in the final fiscal year, where revenues grew by approximately 13.3%.
- Invested Capital Stability
- The invested capital base remained remarkably stable over the six-year period, fluctuating within a narrow range. After peaking at US$ 1,445,030 thousand in 2020, the capital base declined slightly to a low of US$ 1,329,445 thousand in 2022 before returning to US$ 1,416,757 thousand by 2024. This suggests that the revenue growth was achieved without requiring significant additional capital injections.
- Turnover of Capital (TO) Efficiency
- The turnover of capital ratio increased linearly every year, rising from 0.83 in 2019 to 1.22 in 2024. This trajectory demonstrates a significant enhancement in asset productivity. The transition of the ratio above 1.00 in 2022 indicates a threshold where annual adjusted revenues began to exceed the total amount of invested capital, reflecting an optimized ability to generate sales from the existing capital structure.
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Effective Cash Tax Rate (CTR)
Fair Isaac Corp., CTR 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) | |||||||
| Net operating profit after taxes (NOPAT)1 | 589,082) | 476,369) | 445,701) | 407,349) | 279,157) | 238,184) | |
| Add: Cash operating taxes2 | 179,179) | 192,079) | 104,928) | 96,011) | 38,863) | 25,518) | |
| Net operating profit before taxes (NOPBT) | 768,262) | 668,448) | 550,629) | 503,360) | 318,020) | 263,703) | |
| Tax Rate | |||||||
| CTR3 | 23.32% | 28.74% | 19.06% | 19.07% | 12.22% | 9.68% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Accenture PLC | 23.87% | 25.34% | 25.55% | 20.47% | 19.34% | — | |
| Adobe Inc. | 25.54% | 24.54% | 14.22% | 10.28% | 9.63% | — | |
| AppLovin Corp. | 13.75% | 24.45% | — | 68.18% | — | — | |
| Cadence Design Systems Inc. | 31.39% | 21.85% | 25.88% | 13.59% | — | — | |
| Datadog Inc. | -1.95% | -2.78% | 7.98% | 1.83% | — | — | |
| International Business Machines Corp. | 32.07% | 22.38% | 133.97% | 33.45% | — | — | |
| Intuit Inc. | 32.36% | 39.49% | 14.74% | 20.15% | — | — | |
| Microsoft Corp. | 21.33% | 24.32% | 18.98% | 13.05% | — | — | |
| Oracle Corp. | 25.73% | 25.66% | 26.20% | 13.28% | — | — | |
| Palantir Technologies Inc. | -4.95% | 0.60% | — | — | — | — | |
| Palo Alto Networks Inc. | 13.32% | 2.83% | 3.82% | 8.83% | — | — | |
| Salesforce Inc. | 23.51% | 31.02% | 8.32% | 6.83% | — | — | |
| ServiceNow Inc. | 5.72% | 4.32% | 4.41% | 5.03% | — | — | |
| Synopsys Inc. | 30.80% | 24.60% | 11.45% | 18.39% | 10.36% | — | |
| Workday Inc. | -0.43% | 53.58% | -0.77% | 19.25% | — | — | |
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 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 179,179 ÷ 768,262 = 23.32%
4 Click competitor name to see calculations.
An analysis of the financial data from September 30, 2019, to September 30, 2024, reveals a consistent expansion in operating profitability accompanied by a generally increasing cash tax burden, although the latter showed signs of moderation in the final period.
- Net Operating Profit Before Taxes (NOPBT)
- A sustained upward trajectory in NOPBT is evident over the six-year period. Profitability grew from 263,703 thousand US$ in 2019 to 768,262 thousand US$ in 2024. A notable acceleration occurred between 2020 and 2021, where profit increased by approximately 58%, establishing a higher baseline for subsequent growth.
- Cash Operating Taxes
- Cash taxes paid followed a similar growth pattern as profitability for the majority of the period. Payments rose steadily from 25,518 thousand US$ in 2019 to a peak of 192,079 thousand US$ in 2023. However, 2024 marked a departure from this trend, as cash operating taxes decreased to 179,179 thousand US$ despite the continued increase in NOPBT.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate experienced a significant overall increase, rising from 9.68% in 2019 to 23.32% in 2024. The rate climbed steadily through 2021 and 2022, remaining stable around 19%, before spiking to a peak of 28.74% in 2023. The subsequent decline to 23.32% in 2024 indicates a reduction in the cash tax intensity relative to operating profits in the most recent fiscal year.
The divergence observed in 2024, where NOPBT continued to rise while the effective cash tax rate and absolute cash taxes declined, suggests a shift in tax efficiency or the impact of deferred tax assets and liabilities. This contrasts with the 2019-2023 period, during which the cash tax burden grew at a faster proportional rate than the operating profit.
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