Fair Isaac Corporation (FICO) 2024 10-K Earnings Analysis
Fair Isaac Corporation2024 Earnings Analysis
80/100
FY2024 10-K for the period ended September 30, 2024 shows a business built around $624M of free cash flow as much as around reported earnings: Fair Isaac Corporation produced $1.72B of revenue and $513M of net income. FICO Score Penetration, FICO Platform, and FICO Score Standard remain the clearest way to understand where the economics come from and why margin durability looks different here than it would at a generic peer. FICO Score Penetration still supported 79.7% gross margin and 42.7% operating margin, which is not what a financially stretched year usually looks like. The next real question is whether Mortgage-Cycle Sensitivity and Alternative-Credit Models can be absorbed without weakening cash generation.
Filing analysis
Fair Isaac Corporation 2024 10-K Analysis
This page reads Fair Isaac Corporation's 2024 10-K annual report through the EarningsMoat framework: earnings quality, economic moat strength, capital allocation, and key risks. The current overall score is 80/100, or grade B.
FICO Earnings Quality
The earnings-quality module scores 85/100, with Gross Margin: 79.7%, Operating Margin: 42.7%. The core question is whether reported profit is backed by operating cash flow and recurring business economics. See the earnings quality analysis guide.
FICO Economic Moat Analysis
The moat-strength module scores 90/100, with FICO Score Standard: Industry default, Pricing Power: Royalty escalators. The test is whether the advantage can protect returns after competitors react. Read the economic moat analysis guide.
FICO Free Cash Flow vs Net Income
CF/Net Income: 1.23x is the fastest read on whether accounting earnings turn into cash. The capital-allocation module scores 73/100. For the diagnostic, start with cash flow vs net income.
FICO Key Risks from the Annual Report
The risk module scores 73/100, with Mortgage-Cycle Sensitivity: Volume-driven, Pricing Scrutiny: Public commentary. The goal is to separate ordinary disclosure from risks that can change margins, cash flow, leverage, or the moat itself.
Is FICO a High Quality Earnings Stock?
Based on this 2024 filing, FICO passes the first screen for high-quality earnings: the overall grade is B, and the earnings-quality score is 85/100. This is a research screen, not investment advice.
Read the report first
Understand Fair Isaac Corporation first, then decide if it belongs on your watchlist
The FICO score, explanation, management facts, and filing sources are all here. When you want to follow more companies, review new-filing changes, or keep notes for the next review, keep more names in your watchlist.
Read the report first
Understand the company first. Keep up with every filing as your list grows.
A single report helps you judge one company. As your watchlist grows, review score, cash flow, moat, and risk changes together instead of repeating the same work.
Keep more names together
When your list grows, keep FICO with the rest of your names and review score, grade, and risk changes over time.
See how to track more namesAsk follow-up questions
Dig into cash conversion, moat evidence, capital allocation, and risk changes without rereading the full 10-K.
Ask a questionExport and revisit records
Save the FICO report as research notes you can revisit before the next filing.
Save research notesCore Dimension Scores
Evaluating competitive strength across earnings quality, moat strength, and risk sustainability
Overall Score Trend
Earnings Quality
On gross margin, the useful point is that on gross margin, the useful point is that gross margin of 79.7% reflects the royalty-bearing FICO Score B2B model plus the Software-segment subscription mix.
Operating Margin matters here because operating Margin matters here because the 42.7% operating margin reflects the disclosed Scores-segment incremental-margin structure (royalties on bureau credit pulls).
A better way to read cf / net income is to notice that a better way to read cf / net income is to notice that OCF of $633M is 1.23x net income of $513M — reflecting depreciation and stock-based compensation per the cash-flow reconciliation.
Start with the cash statement: $633M of operating cash flow and $8.9M of capex left $624M of free cash flow, with FICO Score Penetration still sitting beside $513M of net income rather than fighting it. What matters is not just the level of 79.7% gross margin, but the fact that FICO Score Penetration and FICO Platform still convert sales into cash without a visible accounting disconnect. Even after $8.9M of capex, FICO Score Penetration still left the company with 42.7% operating margin. The cash profile around FICO Score Penetration still supports the reported profit line, so this does not read like an accrual-driven year.
Moat Strength
What fico score standard really tells you is that what fico score standard really tells you is that the FICO Score is used in over 90% of US consumer-lending decisions as described in the bureau-distribution arrangements with Equifax / Experian / TransUnion.
The practical value of pricing power is that the practical value of pricing power is that FICO has implemented multi-year price increases on bureau-distributed B2B Scores (mortgage Score price increases per the publicly-discussed pricing actions).
FICO Platform helps explain why FICO Platform helps explain why FICO Platform (decision-management cloud platform) drives Software-segment ARR growth as described in the customer-adoption communications.
FICO Score Penetration and FICO Platform are where the operating advantage shows up most clearly in the filing. Per the FY2024 annual report and company disclosures, fICO Score Standard and Mortgage-Cycle Sensitivity are the supporting pieces that keep the core franchise from being only a one-product story. ROE reached -53.3% in FY2024, yet the stronger signal is that FICO Score Penetration still produces cash without a visible contradiction in the numbers. None of this makes disruption impossible, but it raises the bar above simple price competition because FICO Score Penetration is embedded in the customer workflow.
Capital Allocation
On free cash flow, the file suggests that on free cash flow, the file suggests that FCF of $624M (OCF $633M minus capex $9M) supports the share-repurchase program per the capital-return disclosures.
Negative Equity tells you that negative Equity tells you that stockholders' equity of -$963M reflects substantial cumulative share repurchases per the equity-statement disclosures — indicating aggressive buyback intensity but elevated leverage.
The reason to focus on long-term debt is that the reason to focus on long-term debt is that long-term borrowings of $2.21B per the FY2024 balance sheet (versus $151M cash) reflect the disclosed leveraged-buyback capital-structure choice.
Per the FY2024 annual report and company disclosures, capital allocation is only interesting after FICO Score Penetration and the operating base fund themselves, and FY2024 still left $624M of free cash flow to work with. Per the FY2024 annual report and company disclosures, with capex only 0.5% of revenue, the bigger question is where excess cash should go once FICO Score Penetration and the business have been maintained. Negative equity here mostly reflects cumulative buybacks, which puts more analytical weight on cash generation than on book value. Repurchases are doing most of the shareholder-return work, which raises the bar for discipline on price and timing.
Key Risks
The point of mortgage-cycle sensitivity is that the point of mortgage-cycle sensitivity is that mortgage-Score revenue tracks US mortgage-origination volumes as described in the bureau distribution and pricing arrangements.
Pricing Scrutiny matters as a risk because pricing Scrutiny matters as a risk because the multi-year mortgage-Score price increases have attracted lender and regulator commentary on credit bureau pricing dynamics.
What alternative-credit models adds to the risk case is that what alternative-credit models adds to the risk case is that ML-based scoring per public industry communications) compete for lender adoption.
The real watch items here are Mortgage-Cycle Sensitivity and Alternative-Credit Models, not one spectacular blow-up scenario. Once Mortgage-Cycle Sensitivity weakens one part of the model, the rest of the economics can look more fragile than the headline score implies. With goodwill at 45.6% of assets, capital deployment around FICO Score Penetration and portfolio follow-through still matter. The next real question is whether Mortgage-Cycle Sensitivity and Alternative-Credit Models can be absorbed without weakening cash generation.
Management
Ask about this section
Ask one question here. Keep digging when the issue needs more work.
This analysis is for educational purposes only and does not constitute investment advice.