Fair Isaac Corp. (NYSE:FICO)

The analysis of the financial ratios over the reported quarters reveals several notable trends in the company's operational efficiency and working capital management.

Receivables Turnover

The receivables turnover ratio fluctuates within a range from a low of approximately 3.74 to a high exceeding 5. The ratio peaked around late 2021 and early 2022, indicating a period of enhanced efficiency in collecting receivables. Following this peak, a gradual decline is observed, reaching troughs towards mid-2023. This pattern suggests variability in the effectiveness of receivables collection, potentially influenced by changes in credit policies or customer payment behaviors.

Payables Turnover

Payables turnover exhibits a generally high level throughout the periods, with ratios typically above 12 and rising to peak levels above 22 around early 2023. This indicates a relatively rapid payment cycle to suppliers in certain quarters. However, a gradual decline is noted towards the most recent quarters, where the ratio dipped closer to 12, suggesting slower payments or extended credit terms from vendors. This trend may reflect shifts in supplier relationships or cash management strategies.

Working Capital Turnover

Working capital turnover is characterized by considerable volatility, with extreme values such as an unusually high spike above 300, followed by periods with missing data or low single-digit ratios. The inconsistency in this metric implies fluctuations in the efficiency with which working capital is utilized to generate revenue. The presence of missing data in some quarters also suggests potential issues in data continuity or reporting for this measure.

Average Receivable Collection Period

This indicator varies between approximately 70 and 110 days. Periods of shorter collection cycles are interspersed with intervals where days sales outstanding increase, peaking near 107 days around mid-2023. The oscillation highlights changes in credit terms or customer payment performance. Shorter collection periods coincide with higher receivables turnover ratios, reinforcing the relationship between these metrics.

Average Payables Payment Period

The average payables payment period shows a relatively narrow range from about 16 to 34 days, generally trending towards the lower end in recent periods. A notable reduction occurs around early 2023 when the period falls below 20 days, indicating faster payments. Subsequently, a gradual increase is seen towards the later quarters, rising up to 30 days, which corresponds with the decline in payables turnover ratio and suggests a relaxation in payment speed.

In summary, the company demonstrates fluctuating efficiency in both receivables and payables management over the analyzed quarters, with periods of improved liquidity and rapid cycle times followed by phases of slower turnover and extended collection or payment periods. The volatility in working capital turnover metrics further points to variations in resource utilization efficiency. These patterns warrant closer examination to identify underlying causes and to optimize working capital management practices.

Revenues

The revenue figures exhibit fluctuations with a general upward trend over the observed quarters. Starting from approximately 298.5 million USD at the end of 2019, revenues increased steadily, peaking near 374.4 million USD in Q3 2020, then exhibiting periodic declines and recoveries through 2021 and 2022. From early 2023 onwards, a significant upward momentum is evident, with revenues reaching over 536 million USD by mid-2025. This reflects overall growth with intermittent short-term variability.

Accounts Receivable, Net

Accounts receivable demonstrate a variable pattern without a consistent trend across quarters. Initial values at the end of 2019 were approximately 281.6 million USD, rising to over 334.2 million USD in Q3 2020. Subsequently, a decline occurred during 2021, reaching a low around 260.2 million USD in Q4 2021, followed by a renewed upward trajectory throughout 2022 and into 2023. Interestingly, receivables peaked markedly at approximately 492.5 million USD by the end of 2024, before showing a slight reduction by mid-2025. These fluctuations may indicate changes in credit policies, sales terms, or collection efficiency during the periods analyzed.

Receivables Turnover Ratio

The receivables turnover ratio reveals variability with no clear linear trend. At the end of 2019, the ratio was 4.25, followed by a gradual decrease through the first three quarters of 2020, reaching a low near 3.87. A substantial increase occurred in early 2021, peaking at 5.03 in Q1 2021. The ratio then declined through late 2021 and into early 2022, settling around 4.27 by Q3 2022. The remainder of the period is characterized by fluctuations, with instances of both declines and rises, the lowest being approximately 3.42 in Q2 2024 and another peak at 5.06 in Q1 2025. These shifts suggest changing efficiency in collecting receivables relative to sales and may correspond to variations in credit terms or customer payment behavior.

Summary Insights

Overall, revenues show an increasing trend over the entire period, especially in the most recent quarters. Accounts receivable, although fluctuating, have increased alongside revenues but with more pronounced volatility. The receivables turnover ratio varies substantially, reflecting changing collection efficiency or credit policies. The data indicate that while sales are growing, managing receivables effectively remains a challenge with periods of reduced collection efficiency. Continuous monitoring of credit risk and collection processes may be warranted to optimize cash flow and financial performance.

Cost of Revenues

Over the observed period, cost of revenues displayed a fluctuating trend. Initial values around the end of 2019 remained relatively stable into early 2020, followed by a general decline through late 2021, reaching one of the lowest points by December 2021. However, costs rebounded intermittently thereafter, showing a pattern of increase and decrease without a consistent directional trend through to mid-2025. Overall, the cost of revenues exhibits variability but tends to maintain a range approximately between 69,000 and 88,000 thousand US dollars.

Accounts Payable

Accounts payable figures generally show a downward trend from late 2019 through the first quarter of 2023, decreasing from over 32,000 thousand US dollars to levels near 13,915 thousand US dollars. Post that period, the payables amount begins to rise again, displaying an upward trajectory through to mid-2025 where it approaches close to 29,336 thousand US dollars. This suggests a cycle with an initial reduction in outstanding payables followed by a period of increase, possibly reflecting changes in purchasing activities, payment policies, or vendor negotiations.

Payables Turnover Ratio

The payables turnover ratio fluctuates significantly throughout the period. It starts at approximately 10.83 at the end of 2019, rises steadily to a peak near 22.82 in early 2023, and then shows a declining trend, ending at 12 by mid-2025. A rising turnover ratio generally indicates faster payment to suppliers or lower average payables, while a decreasing ratio suggests slower payments or higher outstanding payables. The pattern observed could indicate initially accelerated payments followed by a moderation or slowdown in payment speed towards vendors in the latest quarters.

Interrelationships and Insights

When considering cost of revenues and accounts payable together, the overall picture points to a period where costs decreased initially while payables also decreased, potentially indicating tighter cash management or reduced operational scale. The subsequent rise in payables alongside variable costs may suggest an expansion phase or more flexible payment terms with suppliers. The payables turnover ratio's peak and later decline align with these patterns, implying a dynamic approach to managing supplier payments over time responding to operational and financial conditions.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in key metrics over the observed periods.

Working Capital

Working capital exhibited pronounced volatility throughout the timeline. Starting at 18,962 thousand USD at the end of 2019, it plunged significantly by the first quarter of 2020 to 3,847 thousand USD, before rebounding sharply to reach a peak of 119,567 thousand USD by the third quarter of 2020. This was followed by another moderate decline and period of instability, dipping below zero in the third quarter of 2021 (-8,233 thousand USD), then surging again to reach a high of 381,668 thousand USD by the first quarter of 2025. The notable negative working capital values, especially in the third quarter of 2021 and again at the last recorded period, suggest short-term liquidity challenges or changes in current asset and liability management.

Revenues

Revenues demonstrated a more consistent upward trajectory with minor fluctuations. Starting at approximately 298,504 thousand USD at the end of 2019, revenues generally increased over time, with a few short-term declines. The peak revenue was observed in the second quarter of 2025 at 536,415 thousand USD, nearly doubling the revenue from four years earlier. This upward trend indicates overall business growth despite occasional periodic slowdowns or corrections.

Working Capital Turnover

The working capital turnover ratio showed extreme variability, emphasizing shifts in operational efficiency or capital management. Initial values were exceptionally high with an outlier of 318.71 in the first quarter of 2020, likely influenced by the very low working capital base at that time. Subsequent quarters recorded much lower and fluctuating ratios, generally ranging between roughly 5 and 25, with several quarters missing data. The inconsistency in this ratio may reflect the volatile nature of working capital levels and varying revenue recognition patterns across quarters.

In summary, while revenues indicate steady growth and positive business expansion, the working capital figures suggest irregular liquidity positions and potential management challenges in short-term assets and liabilities. The high volatility in the working capital turnover ratio corresponds with these observations, highlighting fluctuating efficiency in using working capital to generate revenues. These insights could warrant further investigation into cash flow management and operational strategies to stabilize working capital metrics while sustaining revenue growth.

Receivables Turnover Ratio

The receivables turnover ratio exhibited moderate fluctuations over the analyzed period. Starting at 4.25 at the end of 2019, it decreased slightly in early 2020, reaching its lowest levels around 3.87 in mid-2020. This downward trend reversed in late 2020 and early 2021, peaking at 5.03 in March 2021. Subsequent quarters saw a decline again, with ratios oscillating between approximately 3.74 and 4.54, indicating variable efficiency in collecting receivables. Notably, the ratio experienced a notable increase toward the end of 2024 and early 2025, rising to above 5.0 at some points, suggesting improved collection efficiency in those periods.

Average Receivable Collection Period

The average collection period generally followed an inverse pattern to the receivables turnover ratio, as expected. Initially, the collection period was relatively high, near 90 days at the end of 2019 and early 2020, peaking at 94 days in September 2020. It then shortened significantly in early 2021, reaching the lowest point of approximately 72 days at the end of 2020 and again in early 2021, reflecting faster collections during those quarters.

The second half of the time series shows increased variability, with collection periods extending again to above 90 days at multiple points, including peaks above 100 days in mid-2024. This indicates periods of slower receivables turnover. Toward the very end of the period, specifically in early 2025, the collection period shortens again to around 72 to 86 days, suggesting some improvement in credit and collection policies or customer payment behavior.

Overall Trends and Insights

The fluctuating receivables turnover ratio and collection period reflect underlying changes in the company's credit management and customer payment patterns throughout the timeframe. The improvements seen in early 2021 and again toward the end of the period imply strategic or operational adjustments that enhanced cash flow through better receivables management.

The periods of higher average collection days and lower turnover ratios may point to challenges in timely collections, possibly indicating increased credit risk or economic factors affecting customers. These fluctuations emphasize the importance of continued monitoring and adaptation of credit policies to maintain optimal liquidity.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable fluctuations over the observed periods. Initially, it rose sharply from 10.83 to a peak of 17.94 in the first half of 2020, indicating an increased frequency of payment to suppliers. This suggests improved efficiency in managing payables during that period.

Following this peak, the ratio experienced some volatility but generally maintained levels between approximately 15 and 18 through 2021 and most of 2022, reflecting a stable payment pattern. Notably, in early 2023, the ratio reached a higher peak of 22.82, indicating a significant acceleration in payables turnover and thus faster payments to suppliers.

After this peak, the ratio showed a declining trend, dropping to 12 by mid-2025. This reduction suggests a slower payment rate to suppliers in the most recent periods, possibly influenced by strategic cash management or liquidity considerations.

Average Payables Payment Period (Days)

The average payables payment period generally moved inversely to the payables turnover ratio, as expected. It decreased from 34 days at the end of 2019 to a low of 16 days in early 2023, signaling quicker payment to creditors.

After reaching this low, the payment period lengthened gradually to 30 days by mid-2025. This indicates a trend towards extending payment terms or slower payments over recent periods, possibly to optimize cash flow or due to changes in supplier agreements.

The fluctuations between approximately 20 to 25 days throughout much of 2020 to early 2022 suggest a relatively consistent payment policy, with the notable dip around early 2023 marking a temporary shift toward faster payments.

Overall Analysis

The data reflects dynamic management of payables with periods of rapid payment alternating with more extended payment durations. The peaks in payables turnover and corresponding lower payment periods around mid-2020 and early 2023 indicate targeted efforts to settle obligations quickly during those times.

Subsequently, the trend towards longer payment periods and lower turnover ratios by mid-2025 may indicate a strategic shift to preserve liquidity or renegotiate payment terms. These adjustments are typical of a company actively managing working capital in response to operational needs or external economic factors.

In summary, the patterns denote a responsive approach to payables management, balancing between supplier relationships and internal cash flow optimization over the analyzed timeframe.