Sector: Information Technology | Focus: Application Software
HQ: Bozeman, Montana
Financial Risks
FICO faces risks from fluctuating revenues, particularly in the Software segment due to variable sales cycles and reliance on a few large customers. Economic downturns, changes in customer demand, and competition from larger firms are potential threats. Regulatory changes, especially regarding credit scoring and data privacy, could increase compliance costs and limit pricing flexibility. Cybersecurity breaches pose a risk of data loss, reputational damage, and substantial liabilities. Long and variable sales cycles make revenue forecasting challenging. Operating expenses are fixed, potentially impacting profitability during revenue shortfalls.
Financial Upside
FICO's revenues increased 13% in fiscal 2024, driven by a 19% increase in the Scores segment. Annual Recurring Revenue (ARR) for Software grew 8%. A strong Dollar-Based Net Retention Rate (DBNRR) of 106% for Software suggests customer loyalty and revenue growth. Stock repurchases totaling $833.3 million in fiscal 2024 indicate a commitment to shareholder value. FICO's $1.35 billion credit agreement capacity provides flexibility for future growth and acquisitions.
