Analysis of Reportable Segments
Fair Isaac Corp. operates in 2 segments: Scores and Software.
Segment Profit Margin
Fair Isaac Corp., profit margin by reportable segment
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Scores | 88.44% | 88.01% | 88.14% | 85.71% | 85.95% | 85.80% |
| Software | 32.28% | 32.61% | 27.65% | 15.87% | 16.98% | 17.06% |
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).
The profitability profiles of the two reportable segments reveal a stark contrast between a mature, high-margin operation and a segment experiencing significant margin expansion. The overall trend indicates an improvement in operational efficiency across both units, with the most pronounced growth occurring within the software business.
- Scores Segment Performance
- The Scores segment maintains a dominant and stable margin profile. Profit margins remained consistent, fluctuating minimally between 85.71% and 85.95% from 2019 through 2021. A notable upward shift occurred in 2022, with the margin increasing to 88.14% and continuing a gradual ascent to reach 88.44% by September 30, 2024. This performance reflects a highly optimized cost structure and sustained pricing power.
- Software Segment Performance
- The Software segment transitioned from a period of relative stagnation to one of rapid margin growth. Between 2019 and 2021, margins were modest, ranging from 15.87% to 17.06%. A significant inflection point is evident in 2022, where margins expanded sharply to 27.65%, followed by a further increase to a peak of 32.61% in 2023. The margin remained robust at 32.28% in 2024, representing a near doubling of profitability compared to the 2019-2021 baseline.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Segment Profit Margin: Scores
Fair Isaac Corp.; Scores; segment profit margin calculation
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 813,354) | 681,071) | 622,806) | 560,684) | 454,310) | 361,356) |
| Segment revenues | 919,650) | 773,828) | 706,643) | 654,147) | 528,547) | 421,177) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 88.44% | 88.01% | 88.14% | 85.71% | 85.95% | 85.80% |
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 2024 Calculation
Segment profit margin = 100 × Segment operating income ÷ Segment revenues
= 100 × 813,354 ÷ 919,650 = 88.44%
The Scores segment demonstrates a consistent upward trajectory in both revenue and operating income over the six-year period ending September 30, 2024. The segment has successfully scaled its operations while simultaneously expanding its profit margins, indicating strong pricing power and high operational efficiency.
- Revenue and Operating Income Trends
- Segment revenues grew steadily from US$ 421.2 million in 2019 to US$ 919.7 million in 2024. Parallel to this, segment operating income increased from US$ 361.4 million to US$ 813.4 million over the same period. This synchronous growth reflects a robust increase in volume or pricing, with operating income growing at a rate slightly exceeding revenue growth.
- Profit Margin Analysis
- The segment profit margin remained exceptionally high, consistently exceeding 85%. Between 2019 and 2021, margins were stable, fluctuating narrowly between 85.71% and 85.95%. A notable expansion occurred in 2022, when the margin rose to 88.14%, and it has since remained at this elevated level, closing at 88.44% in 2024.
- Operational Scaling
- The ability to increase the profit margin while more than doubling segment revenue suggests that the segment is benefiting from significant economies of scale. The transition from a mid-85% margin to a high-88% margin indicates that incremental revenues are being converted to operating income at a higher rate than historical averages.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Segment Profit Margin: Software
Fair Isaac Corp.; Software; segment profit margin calculation
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Segment operating income | 257,529) | 241,191) | 185,452) | 105,147) | 130,066) | 126,046) |
| Segment revenues | 797,876) | 739,729) | 670,627) | 662,389) | 766,015) | 738,906) |
| Segment Profitability Ratio | ||||||
| Segment profit margin1 | 32.28% | 32.61% | 27.65% | 15.87% | 16.98% | 17.06% |
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 2024 Calculation
Segment profit margin = 100 × Segment operating income ÷ Segment revenues
= 100 × 257,529 ÷ 797,876 = 32.28%
The software segment exhibits a distinct transition from a period of relative stability and moderate profitability to a phase of significant margin expansion and enhanced operational efficiency between 2019 and 2024.
- Revenue Trajectory
- Segment revenues showed moderate growth initially, reaching $766 million in 2020, followed by a notable contraction to $662 million in 2021. From 2022 onward, a consistent recovery trend is observed, with revenues scaling to a period high of approximately $798 million by September 30, 2024.
- Operating Income Performance
- Operating income experienced a decline in 2021, falling to $105 million. However, a sharp acceleration in profitability occurred starting in 2022, with income rising to $185 million and continuing an upward trajectory to $257.5 million in 2024. This growth suggests a decoupling of income from revenue, as operating income increased far more rapidly than the top line.
- Profit Margin Evolution
- The segment profit margin remained relatively stagnant, moving from 17.06% in 2019 to a low of 15.87% in 2021. A substantial structural shift is evident in 2022, when the margin surged to 27.65%. This expansion peaked at 32.61% in 2023 and remained stable at 32.28% in 2024, effectively doubling the profit efficiency of the segment compared to the 2019-2021 period.
The overall trend indicates a successful operational optimization or a shift in the revenue mix toward higher-margin offerings implemented after 2021, resulting in a software segment that generates significantly higher operating returns per unit of revenue.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Segment revenues
Fair Isaac Corp., segment revenues by reportable segment
US$ in thousands
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Scores | 919,650) | 773,828) | 706,643) | 654,147) | 528,547) | 421,177) |
| Software | 797,876) | 739,729) | 670,627) | 662,389) | 766,015) | 738,906) |
| Total | 1,717,526) | 1,513,557) | 1,377,270) | 1,316,536) | 1,294,562) | 1,160,083) |
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).
Total revenue exhibits a consistent upward trajectory over the six-year period, increasing from 1,160,083 thousand US dollars in 2019 to 1,717,526 thousand US dollars in 2024. This represents a steady expansion of the company's top line, with a particularly notable acceleration in growth occurring between the 2023 and 2024 fiscal years.
- Scores Segment Performance
- The Scores segment demonstrates robust and uninterrupted growth throughout the analyzed period. Revenue grew from 421,177 thousand US dollars in 2019 to 919,650 thousand US dollars in 2024, more than doubling its contribution. The growth pattern is characterized by consistent year-over-year increases, indicating a strong and expanding market demand for scoring services.
- Software Segment Performance
- The Software segment displays higher volatility compared to the Scores segment. While revenue started at 738,906 thousand US dollars in 2019, it experienced a significant contraction in 2021, dropping to 662,389 thousand US dollars. A recovery phase followed, with revenue gradually climbing to 797,876 thousand US dollars by 2024. Despite this recovery, the growth rate is considerably slower than that of the Scores segment.
- Revenue Composition and Mix Shift
- A fundamental shift in the revenue mix is observable. In 2019, the Software segment was the primary driver of revenue, contributing approximately 63.7% of the total. By 2024, the Scores segment became the dominant revenue contributor, accounting for approximately 53.5% of total revenue. This transition highlights a strategic shift in the company's earnings profile, moving from a software-centric revenue base to one driven predominantly by scoring services.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Segment operating income
Fair Isaac Corp., segment operating income by reportable segment
US$ in thousands
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Scores | 813,354) | 681,071) | 622,806) | 560,684) | 454,310) | 361,356) |
| Software | 257,529) | 241,191) | 185,452) | 105,147) | 130,066) | 126,046) |
| Unallocated corporate expenses | (186,898) | (156,426) | (148,428) | (136,812) | (144,704) | (144,755) |
| Total | 883,985) | 765,836) | 659,830) | 529,019) | 439,672) | 342,647) |
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).
Total operating income exhibited a sustained upward trajectory from fiscal year 2019 through 2024, increasing from 342,647 thousand US dollars to 883,985 thousand US dollars. This overall growth is primarily driven by strong performance in the Scores segment, which consistently expanded throughout the period, alongside a significant acceleration in Software segment profitability starting in 2022.
- Scores Segment Analysis
- The Scores segment demonstrated continuous and robust growth over the six-year period. Operating income rose from 361,356 thousand US dollars in 2019 to 813,354 thousand US dollars in 2024, representing a total increase of approximately 125%. This segment serves as the primary contributor to the total operating income, maintaining a positive growth slope in every single reporting year.
- Software Segment Analysis
- The Software segment showed more volatility compared to the Scores segment. After a slight increase in 2020, operating income declined to 105,147 thousand US dollars in 2021. However, a sharp recovery occurred in 2022, with income rising to 185,452 thousand US dollars, and continuing to climb to 257,529 thousand US dollars by 2024. This indicates a successful scaling of profitability within the Software division following the 2021 contraction.
- Unallocated Corporate Expenses Analysis
- Corporate expenses remained relatively stable between 2019 and 2021, fluctuating within a narrow range around 140 million US dollars. Starting in 2022, there was a progressive increase in these expenses, reaching 186,898 thousand US dollars in 2024. While these expenses have grown, the pace of increase has been significantly outweighed by the growth in operating income from the reportable segments.
- Total Operating Income Synthesis
- The aggregate operating income more than doubled over the analyzed period. The growth trend shifted from a steady increase between 2019 and 2021 to a more accelerated growth phase from 2022 to 2024. The expansion of the Scores segment remained the dominant factor in this growth, while the Software segment provided additional momentum in the latter half of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?