About Fair Isaac International Corporation

Fair or not, Fair Isaac has a lot to say about whether you get that loan approval. Also known as FICO, the company provides credit scores and risk management tools for businesses worldwide, including banks, credit card issuers, mortgage and auto lenders, retailers, insurance firms, and health care providers. FICO is the creator of the FICO Score, one of the most widely-used scoring systems to determine borrowers' creditworthiness. FICO also provides software for managing decisions and, for consumers, online credit management tools. While the US accounts for about 65% of its revenue, the company operates globally in more than 100 countries. The company has sold about 100 billion FICO scores.

Operations

FICO Scores are determined by using a secret formula which the company tweaks as the economic landscape changes. 

FICO's Applications segment generates more than half of the company's revenue and includes services such as direct marketing, account origination, customer management, and fraud control.

The company's Scores segment, about 30% of revenue, includes its business-to-business scoring products, its business-to-consumer scoring products, and services including the myFICO product for consumers, and associated professional services.

FICO Decision Management Suite, about an eighth of revenue, as well as associated professional services is composed of analytic and decision management software tools that clients can use to create their own custom decision management applications.

Geographic Reach

San Jose-based FICO operates in some 25 locations in the US, Canada, Latin America, the Caribbean, Europe, the Middle East and Africa, and the Asia Pacific region. Nearly 65% of revenue comes from the US, while another 10% of revenue comes from the UK.

Sales and Marketing

FICO's client base includes 700 insurers, 400 retailers and general merchandisers, 150 government or public sector agencies, and 150 health and pharmaceutical companies.

About 20% of FICO's revenue in concentrated in Experian, TransUnion, and Equifax. Other clients include BMW, Chase, CITI, eBay, General Motors, Sprint, Southwest Airlines, and Wal-Mart, among others.

The company markets its products and services through their own direct sales division that is organized around its vertical markets. Outside of the US, FICO markets through subsidiary sales organizations that promote FICO products in their local countries not reached by its direct marketing. FICO also markets through indirect channels that include alliance partners and other resellers.

Financial Performance

Business has been pretty fair for FICO in recent years with revenue increasing an average 5% a annually since 2013. The streak continued in 2017 (ended September), when the company sales rose about 6% to $932 million from 2016 on higher sales in each segment. Applications sales increased due to stronger services and transactional revenue from its Software-as-a-Service products, as well a growth in the mobile communication market.

FICO held costs as a percentage of revenue in check, which pushed net income to $128 million in 2017 from $109 million 2016.

The company maintained cash and cash equivalents of about $105 million in 2017, about $29 million more than 2016.

Strategy

FICO is building up its cloud-based services, providing customers with its analytic products in Software-as-a-Service model instead of on-premise software. The company has migrated many of its software products to SaaS products that are hosted on FICO's cloud. The SaaS applications include FICO Decision Management Suite, which enables clients use to FICO tools, along with rapid application development and visualization tools, develop their own decision management applications and services. FICO has developed its core technical capabilities, extending them through partnerships with other technology companies, as well as through employing open source software.

Mergers and Acquisitions

In 2016 FICO acquired QuadMetrics, which develops technology for managing and quantifying the cybersecurity risks through predictive analytics and proprietary data sources, for $5.7 million.  FICO said the security score will complement the company's existing cybersecurity offerings for threat detection.

Company Background

Mathematician William Fair and electrical engineer Earl Isaac founded Fair, Isaac as a management consulting firm in 1956. They sought a means for analyzing consumer behavior patterns to help in decision-making, and came up with the credit scorecard.

The company flourished over the next three decades. It enjoyed a symbiotic relationship with the evolving credit industry, which could not have grown as it did without Fair, Isaac's tools. The firm began selling overseas in the 1970s. Earl Isaac died in 1983. Fair, Isaac went public in 1987. William Fair retired in 1992 and died in 1996.

In 1992 Fair, Isaac bought consumer database management company DynaMark. Three years later the company introduced the Small Business Scoring Service, an automated system for small-business loan approval. Fair, Isaac in 1995 co-developed a marketing relational database with credit card processor Total System Services.

The company acquired Risk Management Technologies in 1997. It began CreditFYI, an Internet business credit-report provider, in 1998 with Web business adviser Net Earnings and credit bureau Experian Information Solutions. In 1999 the firm merged DynaMark into its own operations to hasten its move into online services.

In 2000 the company launched several products and services over the Internet, in order to position itself as an application service provider (ASP). Fair, Isaac also continued to strengthen its customer relationship management (CRM) offerings through the acquisition of smaller CRM businesses. Fair, Isaac teamed up with Experian in 2001 on a product to sell consumers their FICO scores. The next year it began offering more consumer-targeted services, including tips on improving one's score.

Fair, Isaac acquired HNC Software in 2002. The Fair, Isaac executive suite was revamped to include leaders from HNC, which was absorbed into its new parent. The acquisition was part of a growth strategy that had Fair, Isaac looking outside its traditional top market (the financial services industry) and beyond the borders of the US.

The company dropped the comma from its name in 2003 to become Fair Isaac Corporation.

In 2004 the company acquired UK-based London Bridge Software Holdings, thereby adding clients and financial services software that focuses on customer, credit, and mortgage management. Later in the year, Fair Isaac acquired Braun Consulting, a marketing strategy and technology consulting firm.

 

Fair Isaac rebranded itself as FICO in 2009, underscoring the importance of its flagship FICO Score. Though it retained its legal name, it added "FICO" to the names of most of its products and changed its website and brand logo to follow suit. The company also streamlined operations to cut costs by discontinuing some businesses, selling others, closing some facilities, and cutting staff. It sold its noncore LiquidCredit for Telecom and RoamEx units and exited its Fast Panel and Cortonics product lines.

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Fair Isaac International Corporation

200 Smith Ranch Rd
San Rafael, CA 94903-5551
Phone: 1 (415) 446-6000

Stats

  • Employer Type: Public
  • Employees: 1,500

Major Office Locations

  • San Rafael, CA