Fair Isaac Corporation (FICO) DCF Valuation & Fundamental Primer
Fair Isaac Corporation (FICO) currently trades at $1,653.48 with an enterprise value of $14.90B. Our proprietary institutional model rates Fair Isaac Corporation at 76/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 39.6% vs. historical growth of 10.9% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Fair Isaac Corporation (FICO) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Fair Isaac Corporation (FICO) 3-Scenario DCF Valuation Range
Stress-test FICO's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $1,653.48).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $562.65 -66% | $604.93 -63% | $654.26 -60% | $712.55 -57% | $782.51 -53% |
| 9.3% | $493.65 -70% | $526.96 -68% | $565.20 -66% | $609.56 -63% | $661.64 -60% |
| 10.0% | $436.90 -74% | $463.68 -72% | $494.03 -70% | $528.71 -68% | $568.73 -66% |
| 10.8% | $389.41 -76% | $411.31 -75% | $435.86 -74% | $463.57 -72% | $495.11 -70% |
| 11.5% | $349.10 -79% | $367.26 -78% | $387.44 -77% | $409.98 -75% | $435.35 -74% |
Institutional Software Quality Scorecard (76/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Solid cash generation with minor working capital absorption
Disciplined equity compensation well below software industry average
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- Top-quartile software unit economics: 82.2% gross margin and 49.6% Rule of 40 score
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into FICO?
The current share price demands 39.6% 5-year CAGR (44.2% net of SBC & dilution)—a +28.7% acceleration over historical run-rate (10.9%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (7.9% of revenue) and annual share dilution (0.9%/yr). Accounting for both requires 44.2% 5-year revenue CAGR to justify $1,653.48/sh on a true per-share economic cash flow basis.
Fair Isaac Corporation (FICO) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.99B | $1.99B | $2.21B | $2.45B | $2.71B | $3.01B | $3.34B |
| Gross Profit | $1.64B | $1.64B | $1.82B | $2.01B | $2.23B | $2.48B | $2.74B |
| Operating Income (EBIT) | $924.9M | $924.8M | $1.03B | $1.14B | $1.26B | $1.40B | $1.55B |
| Stock-Based Compensation (SBC) | $156.7M | $156.7M | $173.7M | $192.7M | $213.6M | $236.9M | $262.7M |
| Unlevered Free Cash Flow (FCF) | $769.9M | $769.9M | $853.7M | $946.7M | $1.05B | $1.16B | $1.29B |
| SBC-Adjusted True Cash Flow | $613.2M | $613.2M | $680.0M | $754.0M | $836.1M | $927.2M | $1.03B |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -24.4 + 0.73 × (Rule of 40) · R² = 45%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Fair Isaac Corporation | FICO | $40.08B | $1.99B | 82.2% | 38.7% | 49.6% | 7.9% | 21.6× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 21.6× | $43.02B | $40.08B | $1,653.48 | 0.0% |
| -20% Multiple Compression | 17.3× | $34.42B | $31.47B | $1,298.52 | -20.0% |
| -35% Multiple Compression | 14.0× | $27.96B | $25.02B | $1,032.30 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $9.95B | $7.01B | $289.35 | -76.9% |
Frequently Asked Questions: Fair Isaac Corporation (FICO) Valuation
What is Fair Isaac Corporation (FICO)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Fair Isaac Corporation (FICO) has a Base Case implied value of $493.30 per share (with a Bear Case of $195.49 and a Bull Case of $856.69), compared to its current price of $1,653.48. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Fair Isaac Corporation (FICO)'s Rule of 40 score and Free Cash Flow margin?
Fair Isaac Corporation achieves a Rule of 40 score of 49.6%, combining a 10.9% revenue growth run-rate with a 38.7% TTM free cash flow margin on $1.99B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into FICO stock according to Reverse-DCF analysis?
At $1,653.48 per share (Enterprise Value of $43.02B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 39.6%, compared to Fair Isaac Corporation's historical CAGR of 10.9%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Fair Isaac Corporation compare to Software & Cloud Services software peers?
Fair Isaac Corporation (FICO) earns an institutional Software Quality Score of 76/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Fair Isaac Corporation (FICO)'s valuation?
Fair Isaac Corporation recorded $156.7M in TTM stock-based compensation (7.9% of revenue). When treating SBC as a cash-equivalent compensation expense, Fair Isaac Corporation's SBC-adjusted free cash flow yield is 1.5%, scoring 21/25 on our Shareholder Dilution Friction pillar.