Please ensure Javascript is enabled for purposes of website accessibility

Fair Isaac Corporation's Q4 Earnings Jump 26%

By Jordan Wathen – Updated Nov 5, 2018 at 3:16PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company guided for a double-digit increase in profit in 2019.

The company best known for the FICO credit score, Fair Isaac Corporation (FICO 2.89%), reported that it earned $50.5 million in its fiscal fourth quarter, up 26% from the year-ago period. Higher prices for its core credit-scoring products and wins in cloud services helped drive the year-over-year increase in profit.

Fair Isaac Corporation's Q4: By the numbers

The table below shows Fair Isaac's performance based on several key metrics in the fourth quarter.


Q4 2018

Q4 2017

Year-Over-Year Change

Total revenue

$297.8 million

$253.2 million


Operating income

$70.1 million

$60.8 million


Net income

$50.5 million

$40.0 million


Diluted EPS




Data source: Fair Isaac.

Fair Isaac's results for the fourth quarter were impacted by some one-time items. The company said it realized a pretax gain of $10 million ($0.23 per share after taxes) related to the sale of a minority investment. It also took a $5.8 million ($0.22 per share) loss related to the Tax Cuts and Jobs Act. Conveniently, these two items roughly canceled out.

FICO logo.

Image source: Fair Isaac Corporation.

What happened this quarter

Here are the major themes that played into Fair Isaac's fourth quarter:

  • FICO is proving there are many ways to package and sell a credit score. Fair Isaac's credit scores business is a cash cow, generating the highest margins of any of its products and services. This quarter, the company said scores revenue increased 29% year over year, with business-to-business scores revenue rising 38%. Because there are minimal marginal costs in this business, each incremental dollar of revenue flows almost directly to pretax profit.
  • FICO's applications segment, the largest by revenue, reported a 4% year-over-year increase in revenue to $156 million. Revenue derived from decision-management software increased 1% to $31 million in the third quarter.
  • A shift toward recurring revenue continued. FICO said that roughly 74% of revenue in fiscal 2018 was recurring in nature, up from 70% in fiscal 2017. The company reported $134 million of "bookings" in the fourth quarter, which is essentially the total future value of agreements for services it signed during the quarter.
  • Fair Isaac is cannibalizing its share count with repurchases. During the full fiscal year, Fair Isaac repurchased 1.9 million shares, reducing its share count by 6%. The company still has $200 million of unused repurchase capacity granted by its board of directors.

Looking ahead

Fair Isaac issues guidance on several key metrics every year. The table below summarizes its guidance for 2019 and compares it to the company's actual results in 2018.


2019 Guidance

2018 Actual

Forecasted Change


$1.125 billion

$1.032 billion


GAAP net income

$168 million

$142 million






Non-GAAP net income

$209 million

$194 million






Data source: FICO earnings release.

Management offered some additional information about its guidance on the conference call, suggesting that its guidance looks for a 10% increase in scores revenue, driven by small changes in pricing and larger increases in volume.

Mike Pung, Fair Isaac's chief financial officer, said on the conference call that "a lot of the growth that we've built into the guidance number is frankly coming from deals that we have signed this year that have not gone live yet," referring to the growth in the scores business.

Jordan Wathen has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Fair Isaac. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Fair Isaac Corporation Stock Quote
Fair Isaac Corporation
$423.91 (2.89%) $11.90

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.