Fair Isaac Corp.

Overview Key strengths Key risks Strong brand recognition, industry adoption of its Scores business, and a strong defensible moat around its FICO scores product. High proportion of transaction revenue, which makes it vulnerable to cyclical economic downturns. Leading portfolio of credit decision and fraud-management software, which provides pricing power. High distribution and end-market concentrations in the auto loan, credit card, and home mortgage markets. Moderate leverage in the low-2x area and strong free operating cash flow (FOCF). Significant competition from established and emerging software companies and credit bureaus. Most of the demand in the segment (approximately half of total revenues) stems from financial services customers using FICO's services to calculate consumers? credit scores and determine their creditworthiness. We expect this

...We expect Fair Isaac Corp.'s (FICO) Scores business to sustain solid growth in fiscal 2024 despite a weak mortgage environment. Most of the demand in the segment (approximately half of total revenues) stems from financial services customers using FICO's services to calculate consumers' credit scores and determine their creditworthiness. We expect this demand will remain healthy over the next year. Besides mortgage originations, the FICO score is also well entrenched in auto, credit card, and personal loan originations. While we expect mortgage volumes to remain low during 2024, we note that FICO's pricing power can offset these headwinds. For example, during the quarter ended in December 2023, FICO's mortgage...

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