Fair Isaac Corp. (NYSE:FICO)

Debt to Equity Ratios

The debt to equity ratio exhibited moderate fluctuations in the early periods, starting at 3.81 and increasing to a peak of 8.46 by June 30, 2021. Subsequent data points are unavailable, limiting trend analysis beyond mid-2021. When considering operating lease liabilities, the ratio follows a similar pattern, slightly higher overall.

Debt to Capital Ratios

The debt to capital ratio indicates a generally increasing trend from 0.79 at the end of 2019 to over 2.0 by December 31, 2024. This upward movement suggests a growing proportion of debt in the company’s capital structure, reflecting a higher leverage posture over time. Incorporation of operating lease liabilities yields comparable results, reinforcing this observation.

Debt to Assets Ratios

Debt to assets ratios also reveal a rising trajectory. Starting at 0.59 in December 2019, the ratio climbs steadily, surpassing 1.4 by December 2024, which is atypical since this ratio conventionally does not exceed 1. Adjustments including operating lease liabilities present similar elevated levels, indicating that liabilities are increasingly surpassing assets or an accounting classification influencing the metric.

Financial Leverage

The financial leverage ratio peaked sharply to 12.73 in June 2021 from a baseline of 6.41 in December 2019. This indicates a significant increase in leverage, possibly reflecting more borrowing or lower equity capital during this timeframe. Data beyond this period is missing; hence, it is not possible to ascertain if this trend persisted.

Interest Coverage

Interest coverage ratios show an overall improvement from 6.54 at year-end 2019 to a peak near 12.8 in the latter half of 2021, suggesting enhanced ability to meet interest obligations. From late 2021 onwards, the ratio gradually declines but remains stable, fluctuating around 6.7 to 7.3 through early 2025. This denotes solid, though slightly diminished, capacity to service debt.

General Insights

The data collectively indicate that the company has been increasing its leverage, as evidenced by rising debt to capital and debt to assets ratios. Despite higher leverage, interest coverage remains adequate, implying sustained operational profitability or cost management to cover interest expenses. However, the surge in financial leverage in mid-2021, along with high debt ratios, could suggest increased financial risk during that period. The presence of some unexpectedly high ratios, notably debt to assets exceeding unity, may merit closer examination of accounting treatments or asset valuations.

The financial data reveals distinct trends in the company’s capital structure over the analyzed periods.

Total Debt

The total debt shows an overall upward trend from the end of 2019 through mid-2025. Starting at approximately $918 million, total debt increases steadily, with occasional acceleration particularly evident after late 2021. By mid-2025, total debt approaches $2.78 billion, indicating significant leverage growth over the period.

Stockholders’ Equity (Deficit)

Stockholders’ equity presents a notable decline with considerable fluctuations. The equity balance initially shows positive values at the beginning of the period, peaking near $331 million in September 2020. Subsequently, equity deteriorates sharply, becoming negative from the September 2021 quarter onward. This negative equity deepens consistently, reaching a deficit of approximately $1.40 billion by mid-2025. This pattern reflects increasing accumulated losses or a reduction in net assets relative to liabilities.

Debt to Equity Ratio

The debt to equity ratio is available for the early quarters, showing volatility. Initially, it fluctuates between roughly 2.5 and 4.4 times, indicating varying levels of leverage relative to equity. By early 2021, the ratio spikes to 8.46, reflecting rising debt against shrinking equity. Data beyond this period are missing, likely due to the equity turning negative, which complicates ratio calculation and interpretation.

Insights and Implications

The rising total debt in conjunction with steadily declining and ultimately negative equity suggests an increasing reliance on debt financing and potential financial distress. The deteriorating equity base indicates potential losses or write-downs impacting net asset value. The high leverage ratio in the early periods reinforces a riskier capital structure, potentially affecting creditworthiness and financial stability. The persistence of negative equity into later periods could raise concerns about solvency and the company’s ability to sustain operations or finance growth without restructuring.

The financial data reveals several key trends in the company's debt and equity situation over the analyzed periods. There is a notable increase in total debt (including operating lease liability) from December 2019 through June 2025, indicating a steady rise in the company's leveraging activities. The debt increased from approximately $999 million to over $2.8 billion, more than doubling during this timeframe. This upward trend is interrupted slightly by a minor dip around the third quarter of 2022, but the general pattern is one of increasing indebtedness.

Conversely, stockholders’ equity demonstrates a declining trajectory, shifting from a positive position of about $241 million at the end of 2019 to a significant deficit exceeding $1.3 billion by the end of the forecast period in mid-2025. The equity maintains positive figures through 2020 but transitions into negative territory starting in the third quarter of 2021. The deficit deepens consistently thereafter, indicating deteriorating net asset value attributable to stockholders.

The debt-to-equity ratio confirms this trend in the earlier periods, showing fluctuations from 4.14 in December 2019 to a peak of 8.92 by June 2021. However, data for this ratio are missing for the latter periods, which may coincide with the stockholders’ equity turning negative and thus making the ratio less meaningful or potentially undefined due to negative equity values.

Total Debt

Exhibits a marked and steady increase over the duration, rising more than twofold which suggests growing reliance on borrowing or leasing obligations to finance operations or growth.

Stockholders' Equity

Transitions from positive to substantial negative values, implying accumulated losses, increased liabilities over assets, or possible impacts from write-downs or dividends paid in excess of earnings.

Debt to Equity Ratio

Rises significantly through mid-2021, indicating increasing leverage and associated risk, but is unavailable for later periods likely due to negative equity, limiting interpretability.

Overall, the company’s capital structure appears to be under increasing financial stress, with rising debt levels and diminishing equity. This profile may raise concerns regarding solvency and financial stability if such trends persist without corrective measures.

Total Debt

The total debt exhibits an overall increasing trend from the starting point to the end of the observed period. Initially, the debt hovered around the 900 million US$ range, showing moderate fluctuations in the first year. From approximately December 2020 onward, the total debt increases more sharply, surpassing 1.6 billion US$ by the end of 2021 and continuing to rise consistently thereafter. By the last periods, total debt reaches levels exceeding 2.7 billion US$, indicating a significant escalation in leverage over the timeframe.

Total Capital

Total capital presents a less consistent pattern compared to total debt. Starting at around 1.16 billion US$, it fluctuates slightly within a plateaued range through the initial quarters. After peaking near 1.22 billion US$ in mid-2023, the total capital falls back somewhat and remains in the approximate range of 1.13 to 1.4 billion US$ for the latter quarters. This reflects relatively limited growth in the equity or combined capital base relative to the increase in total debt.

Debt to Capital Ratio

The debt to capital ratio reveals a marked upward trend throughout the period. Starting at a moderate level below 0.8, the ratio gradually climbs, with sporadic increases followed by minor pullbacks. From late 2020, the ratio crosses 1.0 and continues elevating steeply, reaching values above 1.7 by late 2022. The ratio peaks near 2.0 by the end of the dataset, indicating the company’s debt has grown to roughly double the total capital. This trend suggests a rising leverage position with potentially increased financial risk over time.

Overall Analysis

The financial data implies a sustained increase in leverage as total debt grows at a faster pace than total capital. The rising debt to capital ratio highlights a shift toward greater reliance on debt financing, which may affect the company’s risk profile and cost of capital. The relative stagnation or slight volatility in total capital contrasts with the continuous build-up in debt, suggesting caution for stakeholders monitoring financial stability and solvency.

Total Debt (Including Operating Lease Liability)

The total debt exhibited a generally increasing trend over the observed period. Starting at approximately $999 million at the end of 2019, the debt showed some fluctuations during early 2020 but then consistently rose from the second half of 2020 onwards. Notably, there were significant increments between September 2020 and December 2021, where the debt escalated sharply from around $908 million to about $1.68 billion. This upward trajectory continued steadily, reaching a peak of approximately $2.8 billion by June 2025.

Total Capital (Including Operating Lease Liability)

Total capital, in contrast, showed modest variability but overall a slight declining tendency until late 2022, starting around $1.24 billion at the end of 2019 and dipping to its lowest near $1.09 billion by September 2022. From that point forward, total capital generally recovered and increased, peaking around $1.42 billion in March 2025 before experiencing a slight decrease at the end of the period. Despite this moderate recovery, total capital did not return to the initial levels observed at the start of the period.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio demonstrated a noticeable upward pattern throughout the timeframe. Initially, this ratio was around 0.81 at the end of 2019, suggesting that debt was approximately 81% of total capital. During 2020, the ratio dropped temporarily to as low as 0.73 at the end of the third quarter, suggesting a slight reduction in leverage relative to capital. However, starting late 2020, the ratio began to rise sharply, surpassing 1.0 by mid-2021 and continuing to climb. By the end of 2021, the leverage ratio had escalated to an elevated range between 1.47 and 1.74, indicating debt largely exceeded total capital. This upward trend persisted with minor fluctuations, reaching a high of 2.0 by June 2025, which implies that total debt doubled the capital base.

Overall Analysis

The company’s financial structure changed substantially over the analyzed quarters, with a marked increase in debt levels outpacing capital adjustments. The considerable rise in the debt to capital ratio reflects increased financial leverage and potential risk in capital structure. Although capital experienced some recovery towards the latter part of the period, it remained insufficient to balance the growing debt levels. These trends suggest heightened reliance on debt financing, which may have implications for credit risk, cost of capital, and financial flexibility going forward.

The analysis of the financial ratios and figures over the observed quarters reveals several important trends. Total debt exhibits a generally increasing pattern throughout the timeline, starting from approximately 918 million USD and rising progressively to nearly 2.78 billion USD. This indicates a significant accumulation of liabilities over the observed periods.

Total assets demonstrate a different trajectory. Initially, assets show minor fluctuations around a range of approximately 1.55 to 1.60 billion USD in the earlier quarters; however, in the later quarters, a slight upward trend is evidenced, with total assets growing from roughly 1.46 billion USD to about 1.86 billion USD. Despite this gradual increase, the asset growth does not keep pace with the rising debt levels.

Debt to Assets Ratio

The debt to assets ratio begins at 0.59, reflecting a moderate leverage level at the end of 2019. The ratio fluctuates slightly around this level in the initial phases, but from the third quarter of 2021 onwards, it increases sharply beyond 1.0, peaking at 1.49 in the second quarter of 2025. A ratio above 1.0 implies that total debt exceeds total assets, signaling heightened financial risk and leverage.

In summary, the growing total debt combined with only marginally increasing total assets results in a rising debt to assets ratio, exceeding 1.0 in the latter periods. This suggests that the company is increasingly financing its operations and investments through debt rather than equity or asset accumulation. Such a trend could pose concerns regarding financial stability and solvency if the debt levels are not managed prudently relative to asset growth and operational cash flows.

Total debt (including operating lease liability)

The total debt demonstrates a generally increasing trend over the periods analyzed. Starting at approximately 999 million USD at the end of 2019, the debt level saw moderate fluctuations early in 2020, with a decrease in the third quarter of that year, followed by a consistent upward trajectory from early 2021 onward. By mid-2025, total debt surpassed 2.8 billion USD, nearly tripling since the start of the period. There were some brief periods of stabilization or slight decreases, such as from late 2022 to late 2023, but the overarching pattern is a substantial rise in total debt.

Total assets

Total assets remained relatively stable but showed some variability throughout the timeframe. Beginning near 1.55 billion USD at the end of 2019, assets exhibited minor increases and decreases, maintaining a range close to 1.45 to 1.6 billion USD during 2020 and 2021. From 2022 onwards, total assets gradually increased, reaching above 1.86 billion USD by mid-2025. Despite this upward movement, the growth pace in total assets was considerably slower and more moderate compared to the rise in debt.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio indicates a significant increase in leverage over the reported periods. Initially, the ratio fluctuated around 0.6 to 0.7 in 2019 and 2020, with a notable decline to 0.57 by September 2020. However, from late 2020 through 2021, the ratio surged sharply, reaching as high as 1.15 to 1.37, signifying that total debt exceeded total assets during much of this period. After peaking, the ratio showed some declines and minor fluctuations but consistently remained above 1.0, signifying high financial leverage. By mid-2025, the ratio approached 1.5, indicating a continuing trend of rising debt relative to assets, suggesting increased financial risk exposure or aggressive leverage policy.

Total Assets

The total assets exhibited moderate fluctuations over the observed periods. Initially, the assets rose gradually from approximately $1.55 billion at the end of 2019 to around $1.61 billion by the third quarter of 2020. Following this peak, a decline was noted in late 2021, with assets decreasing to about $1.46 billion. From early 2022 onwards, the asset base showed a recovery trend, growing steadily and reaching roughly $1.86 billion by mid-2025, indicating a long-term upward movement after a phase of contraction.

Stockholders’ Equity (Deficit)

The stockholders’ equity experienced considerable volatility and a prolonged downward trend during the examined period. Starting positive at about $241 million at the end of 2019, equity values surged to over $331 million by the third quarter of 2020, signaling a temporary strengthening. However, from 2021 onwards, the equity turned negative and progressively deteriorated, falling from a slight deficit near $111 million to a significant deficit exceeding $1.39 billion by mid-2025. This trajectory reflects growing accumulated losses or liabilities exceeding assets, which may raise concerns regarding financial stability and solvency.

Financial Leverage

The financial leverage ratio showed notable fluctuations in the earlier quarters, with a decline from 6.41 at the end of 2019 to 4.85 by the third quarter of 2020, suggesting reduced reliance on debt relative to equity at that time. Subsequently, leverage rose sharply to 12.73 by mid-2021. Data for leverage is not provided beyond that point; however, considering the large negative equity developments, it is likely that leverage may have increased or remained high, reflecting a higher proportion of liabilities relative to equity.

Earnings before interest and tax (EBIT)

The EBIT shows a general upward trend over the period analyzed, starting at 51,663 thousand USD at the end of 2019 and reaching 269,890 thousand USD by mid-2025. Notably, there is a significant increase in EBIT during mid-2021, peaking sharply at 197,910 thousand USD in June 2021, followed by a decline in the subsequent quarters. After this volatility, EBIT experiences steady growth, surpassing previous peaks and maintaining elevated levels through the later periods.

Interest expense, net

The net interest expense displays a consistent increase throughout the periods. Beginning at 9,768 thousand USD at the end of 2019, it escalates steadily to 32,899 thousand USD by mid-2025. There are no major reversals or drops, indicating a rising cost of interest expense, which may be attributed to increasing debt levels or interest rates over time.

Interest coverage ratio

The interest coverage ratio initially improves from 6.54 at the end of 2019 to a peak of 12.8 in September 2021, reflecting strong EBIT growth relative to interest expenses. However, after this peak, the ratio declines and stabilizes around the range of approximately 6.7 to 7.3 through to mid-2025. This suggests that while EBIT continues to grow, the interest expense has also increased sufficiently to limit improvements in the coverage ratio beyond this moderate range.

Overall insights

The data indicates that the company has expanded its operating earnings substantially over the five-year period, with EBIT increasing more than fivefold. However, this growth is accompanied by a marked rise in interest expenses, which tempers the interest coverage ratio. The interest coverage ratio’s peak followed by stabilization suggests the company’s ability to service its debt remains solid but with less cushion than implied during mid-2021. The increasing interest expense trend warrants monitoring to ensure sustainable debt servicing in the future.