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).
- Scores Segment Profit Margin
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The profit margin of the Scores segment exhibits a relatively stable trend over the examined period. It starts at 85.8% in 2019 and maintains a consistent level around 85.7% to 86.0% through 2020 and 2021. From 2022 onward, there is a noticeable increase, with margins rising to approximately 88.1% in 2022, followed by minor fluctuations at slightly above 88% in 2023 and 2024. This suggests an improvement in profitability or operational efficiency in the Scores segment during the latter part of the period.
- Software Segment Profit Margin
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The Software segment shows a contrasting trend with a marked increase in profit margin over time. Initially, the margin was relatively low and stable, around 17% in 2019 and 2020, declining slightly to 15.87% in 2021. However, starting in 2022 there is a significant improvement, with the margin jumping to 27.65%, and increasing further to exceed 32% in both 2023 and 2024. This substantial upward movement indicates a strong enhancement in profitability, which may reflect changes such as improved cost management, higher pricing power, or favorable demand conditions in the Software segment.
- Overall Observations
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Both segments demonstrate positive momentum in profit margin by the end of the analyzed timeframe, with Scores maintaining a high margin and Software showing a notable recovery and growth. The Scores segment remains a dominant source of stable profitability, while the Software segment’s rapid improvement suggests it is becoming a more significant contributor to overall earnings quality. The divergent starting points and subsequent convergence towards higher margins imply strategic shifts or operational improvements specific to the Software business.
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 analysis of the financial performance over the six-year period indicates a consistent upward trajectory in both segment operating income and segment revenues. The segment operating income experienced substantial growth, increasing from approximately $361 million in 2019 to over $813 million in 2024. This represents more than a twofold increase, highlighting strong profitability improvements within the segment.
Segment revenues also followed a robust growth pattern, rising from about $421 million in 2019 to nearly $920 million in 2024. This steady increase in revenues suggests successful market expansion or enhanced sales effectiveness over the period.
The segment profit margin remained relatively stable throughout the years, showing minor fluctuations but generally maintaining a high margin above 85%. The margin improved slightly from 85.8% in 2019 to 88.44% in 2024. This stability and incremental enhancement in profit margin alongside increasing revenues and operating income imply effective cost management and operational efficiency.
- Segment Operating Income
- Demonstrated strong growth with a consistent increase each year, more than doubling over six years.
- Segment Revenues
- Steadily increased annually, reflecting expanding business activity and market presence.
- Segment Profit Margin
- Remained high and stable, with slight improvement indicating maintained profitability despite growth pressures.
Segment Profit Margin: Software
Fair Isaac Corp.; Software; segment profit margin calculation
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 segment operating income for the software division showed fluctuations over the analyzed period. Starting at approximately $126 million in 2019, it experienced a marginal increase in 2020, followed by a noticeable decline in 2021. Thereafter, a strong recovery occurred in 2022, with operating income rising sharply and continuing to increase through 2023 and 2024, reaching a peak near $258 million in the latest year.
Segment revenues displayed variability but generally exhibited an upward trend. Revenues rose from around $739 million in 2019 to a high in 2020, then declined in 2021 and remained relatively stable in 2022. Growth resumed in 2023 and intensified in 2024, where revenues approached nearly $798 million, representing the highest value recorded in the time series.
The segment profit margin followed a trajectory that largely correlates with operating income. The margin was relatively stable around 17% in 2019 and 2020, then declined slightly in 2021. A significant improvement occurred in 2022, with profitability advancing notably above 27%, followed by further gains in 2023 and a slight dip yet maintenance of a strong margin above 32% in 2024.
- Operating Income Trend
- Initial stability and modest growth until 2020, a dip in 2021, then robust recovery and continuous growth through 2024.
- Revenue Pattern
- Overall growth punctuated by a decline in 2021, stable revenues in 2022, and resumed growth in the last two years, reaching the highest levels observed in 2024.
- Profit Margin Development
- Margins remained fairly constant prior to 2021, decreased slightly in 2021, followed by significant improvement starting 2022, and sustained high profitability through 2024.
These patterns suggest a recovery phase commencing in 2022, characterized by enhanced profitability and revenue growth. The improvement in segment profit margin indicates either better cost control, higher pricing power, or a more favorable product mix contributing to improved operating leverage in the most recent years.
Segment revenues
Fair Isaac Corp., segment revenues by reportable segment
US$ 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).
The segment revenues exhibit a consistent growth trend over the six-year period analyzed. Total revenues increased steadily each year, reflecting positively on the company's overall performance.
- Scores Segment
- The Scores segment showed a continuous upward trajectory from 421,177 thousand US dollars in 2019 to 919,650 thousand US dollars in 2024. This represents more than a doubling of revenue over the period, indicating strong demand or successful product monetization. The growth was particularly notable between 2023 and 2024, where an increase of approximately 18.8% occurred, suggesting acceleration in this segment's revenue generation.
- Software Segment
- The Software segment revenue presented a somewhat fluctuating trend. Starting from 738,906 thousand US dollars in 2019, revenue peaked in 2020 at 766,015 thousand US dollars, but then declined sharply to 662,389 thousand US dollars in 2021. Following this dip, it recovered gradually over the next three years, reaching 797,876 thousand US dollars in 2024. Despite the mid-period volatility, the overall six-year trend was positive, with a total increase of approximately 8% from 2019 to 2024.
- Total Revenue
- Total revenues increased consistently from 1,160,083 thousand US dollars in 2019 to 1,717,526 thousand US dollars in 2024. The growth was steady, with the highest yearly increment observed between 2023 and 2024, reflecting combined strength from both segments. This steady increase signals overall healthy business expansion and successful revenue diversification.
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).
The operating income data over the six-year period reveals several notable trends and shifts across different segments.
- Scores Segment
- The Scores segment shows a consistent upward trend in operating income, increasing each year from $361.4 million in 2019 to $813.4 million in 2024. This represents strong growth, more than doubling over the six-year period. The growth appears steady year-over-year, indicating this segment's increasing contribution to overall profitability.
- Software Segment
- The Software segment exhibits more variability compared to Scores. From 2019 to 2020, there is a slight increase from $126 million to $130 million, followed by a decline to $105 million in 2021. However, from 2021 onwards, there is a significant recovery and growth, with operating income rising to $257.5 million by 2024. This suggests initial challenges or investments impacting profitability through 2021, followed by a strong turnaround and expansion in the subsequent years.
- Unallocated Corporate Expenses
- Unallocated corporate expenses consistently decrease operating income, as indicated by negative values throughout the period. These expenses remain relatively stable from 2019 to 2021, around -$145 million, then begin to increase in magnitude from 2022 onwards, reaching nearly -$187 million in 2024. The growing corporate expenses in later years may reflect increased overhead costs or strategic investments at the corporate level.
- Total Operating Income
- Total operating income demonstrates a clear upward trend, rising steadily from $342.6 million in 2019 to $884.0 million in 2024. This growth reflects the combined effects of expanding Scores and recovering Software segment incomes, despite increasing unallocated corporate expenses. The total growth indicates overall positive performance and enhanced operational effectiveness across segments.
In summary, the data show robust growth in the Scores segment, a recovery and expansion phase in the Software segment, and increasing unallocated corporate expenses which partially offset these gains. Overall, the company's total operating income exhibits strong growth, highlighting improved segment performance and effective management of expenses over the analyzed period.